Yahoo acquires video ad service for 640m

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.