Having filed for voluntary Chapter 11 bankruptcy on March 29, ad tech company Sizmek has reportedly approached the US bankruptcy court to authorise the approval to sell its demand-side platform (DSP) to Zeta Global.
According to a report on AdAge, Zeta Global has offered around $36 million for Sizmek, including a mix of cash and preferred stock. Zeta proposed a private sale instead of a prolonged court-supervised auction with competitive bids, which is common practice in bankruptcy.
Zeta Global is a marketing technology and cloud-software company co-founded by former Apple CEO John Sculley. Zeta’s customer relationship management service gives advertisers first-party data on consumer targets.
At the time of filing for bankruptcy, Sizmek was in talks with stakeholders regarding the state of the company given its “over-leveraged balance sheet” and financial strain (taking on $172 million in unsustainable debt) amid tense competition by tech giants within the programmatic advertising industry. This also underscored investors’ growing uncertainty about the ad tech ecosystem and challenges facing independent operators trying to compete against the tech giants.
The likelihood of this acquisition, which is set to close this month, will help Sizmek achieve greater scale in the programmatic advertising space. The US bankruptcy court has scheduled a hearing next week (April 2019) to consider the offer, which if approved, will allow Zeta to integrate Sizmek’s DSP to its existing offering to help ad buyers buy programmatic inventory.
According to court filings referenced in the Wall Street Journal, Zeta is entitled to a breakup fee of up to $250,000 and reimbursement of up to $500,000 in expenses if the deal falls through