Yahoo acquires video ad service for $640m

<p>Yahoo buys Brightroll for $640 million to boost video ads.</p>

Yahoo is taking a step further in turning its web portal into a hub for video by purchasing the video advertising service BrightRoll. The company has announced it is paying $640 million (£402 million) to acquire the San Francisco-based company.

BrightRoll is expected to produce more than $100 million in revenue this year, according to Yahoo, which added that it will bring on BrightRoll’s 400 employees to join Yahoo’s digital video advertising team. 

The move is expected to help Yahoo grow its video advertising platform and boost declining display ad revenues. The company reported last month that third quarter revenue from ads fell by five per cent from a year earlier.

"Here at Yahoo, video is one of the largest growth opportunities, and BrightRoll is a terrific, strategic and financially compelling fit for our video advertising business," said chief executive Marissa Mayer in a statement.

The acquisition is Yahoo's first major purchase since receiving $9.4 billion in September from selling part of its stake in Chinese e-commerce giant Alibaba, the Washington Post reports.

"BrightRoll is a large, growing and profitable business," Marissa Mayer added. "This acquisition in no way detracts from our commitment to being a good steward of capital."

Scott Burke, senior vice president of advertising and data platforms at Yahoo, said the company will continue to look for acquisitions that could help it return to growth in the display business in 2015.

The BrightRoll acquisition is expected to be completed in the first quarter of 2015. Yahoo! Inc shares rose 1.47 per cent today (November 12th) following the announcement to reach $49.7710 at 10:50 ET in New York.

Find up to date information on the FTSE 100 and spread betting strategies at City Index.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.