Telenor ASA — M&A Activity 2016

Feb 1, 2016

Telenor to acquire marketing technology firm Tapad

Telenor to acquire marketing technology firm Tapad

Telenor Group has on 29 January 2016 entered into an

agreement to acquire approximately 95% of Tapad Inc., a

leading marketing technology firm. The purchase price is USD

360 million, on a debt and cash-free 100% basis. The

acquisition enables Telenor to take a position within the

rapidly growing market for advertising technology, and

secures important competence within digital marketing and

analytics.

Tapad, a New York-based startup, was established in 2010 by

Norwegian entrepreneur Are Traasdahl, the company's Chief

Executive Officer. The company delivers unified cross-device

marketing technology solutions that give publishers,

marketers and technology providers a holistic view of

consumers across devices and screens, including smartphones,

tablets, home computers and smart TVs. Traasdahl and his

Norwegian co-founder, Dag Liodden, have together retained a

5% stake in Tapad.

"With the acquisition of Tapad, Telenor Group is taking a

position within the rapidly growing market for advertising

technology, and securing important competence within digital

marketing and analytics. I believe significant value can be

created from applying marketing technology to improve the

digital capabilities of our core telecom business. This will

improve our understanding of customer behaviour, and supports

building a platform for other business areas," says Sigve

Brekke, Chief Executive Officer of Telenor Group.

Tapad is a market leader in the U.S., providing an accurate

and unified approach to connecting with consumers across

screens. Tapad's innovative device management solution, The

Tapad Device GraphTM, assimilates billions of data points

from different devices and platforms, and helps customers

recognize, measure and monetize their audiences across all of

their internet connected devices, while at the same time

respecting data privacy.

"We are thrilled to join the Telenor family. With more than

200 million mobile subscribers in 13 markets, Telenor is one

of the largest and most successful telecom companies

globally. I am excited by what this acquisition means for our

employees, our partners and our continued growth. This will

accelerate our vision to become the worlds' leading provider

of unified digital marketing solutions," says Are Traasdahl,

CEO and founder of Tapad.

Within its media business, Tapad currently has more than 160

of the top U.S. brands among its customers and benefits from

over 50 data technology licensing partnerships. In 2015, the

company is expected to report* revenues of USD 57 million,

growing at 70% compared to 2014, and an EBITDA loss of USD 12

million. In 2016, revenues are estimated to increase to

around USD 90 million. Telenor expects Tapad to reach EBITDA

break-even in 2017. Tapad has approximately 160 employees,

with offices in 13 key cities in the U.S. and Europe.

The digital advertising market is sizeable and fast-growing,

with mobile advertising driving the growth. The total global

market amounted to approximately USD 160 billion in 2015**.

The market has seen a rapid development in recent years with

the rise of algorithmic and automated buying at the expense

of traditional advertising networks. This shift has enabled

digital marketing operations, increasing the value of

granular user data. The US digital advertising market is the

most developed in terms of market size and competence. As

emerging advertising markets are still small and

underdeveloped, Telenor believes there are solid growth

opportunities in both Tapad's established markets and within

Telenor's footprint in emerging markets.

Telenor's ambition is to deliver a broad range of relevant,

personalized and engaging digital services for our customers,

as well as to improve efficiency by further digitizing our

core business, including important areas like sales,

marketing and distribution. Telenor has previously taken

positions within new digital business areas within the

Internet of Things, Online Classifieds and Financial

Services. The acquisition of Tapad will give Telenor a solid

position within advertising and marketing technology and

strengthen Telenor's data analytics capabilities

significantly.

The main sellers are Are Traasdahl and his investment company

Spring Capital (in total 46.5%), FirstMark Capital, Firsthand

Technology, Avalon Ventures, WPP and Metamorphic Ventures.

Tapad will be operated as a stand-alone company. Traasdahl,

the current CEO of Tapad, and Dag Liodden, co-founder and

CTO, will maintain their positions.

The closing of the transaction is subject to regulatory

approvals. Closing is expected in first quarter 2016.

* 2015 figures yet to be audited

** Source: Magna Global