A plan by Yahoo CEO Marissa Mayer to turn her Web portal into a hub for video took yet another (expected) step forward on Tuesday, when the company made official its rumored acquisition of video advertising service BrightRoll.
Yahoo (YHOO) said it is paying roughly $640 million in cash for the San Francisco-based company, which was founded in 2006. 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 roughly 400 employees to join Yahoo’s digital video advertising team. The deal had been expected since TechCrunch reported last month that the two companies were in negotiations.
“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,” Mayer said in a statement.
Mayer has come under fire recently for her acquisition strategy, especially by activist investor Starboard Value. Starboard said recently that Mayer’s acquisitions have yet to bear much fruit and reportedly pushed for a breakup of the company. Mayer countered by claiming that Yahoo’s acquisitions have helped add users while pointing to her largest acquisition, the $1.1 billion purchase of Tumblr, as a source of revenue growth this year. Tumblr also launched an updated video player at the end of October.
“As with every acquisition, we have been extremely thoughtful about our approach to the video advertising space,” Mayer said in a statement about the BrightRoll deal. “This acquisition will accelerate the growth of both companies – we can help BrightRoll scale to even more advertisers globally and they can bring their tremendous platform offering to Yahoo’s advertisers.”
The BrightRoll acquisition is expected to be completed in the first quarter of 2015.