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Photoshop Maker Adobe to Buy Video Ad Firm TubeMogul

November 10, 2016

Photoshop software maker Adobe Systems said on Thursday it would buy advertising company TubeMogul for about $540 million, net of debt and cash, giving it a bigger presence in the rapidly growing online video market.

Adobe’s $14-per-share cash offer represents an 82.5% premium to TubeMogul’s Wednesday close.

Shares of TubeMogul (TUBE), which allows advertisers to buy video ad space using its software, jumped to $13.95 in early trading on Thursday.

The deal will help Adobe add an ad buying platform to its digital marketing unit, which offers tools for businesses to analyze customer interactions and manage social media content.

Advertising technology firms such as TubeMogul, Rocket Fuel and Tremor Video face fierce competition from online advertising giants Facebook (FB) and Alphabet’s Google (GOOG).

Up to Wednesday’s close, TubeMogul’s shares had fallen nearly 44% this year.

Facebook, Google and Twitter have all been betting big on video over the past year, a format where advertisers are willing to pay a premium for a few seconds of users’ undivided attention.

“Whether it’s episodic TV, indie films or Hollywood blockbusters, video consumption is exploding across every device and brands are following those eyeballs,” said Brad Rencher, Adobe’s executive vice president of digital marketing.

Adobe said the acquisition would not have an impact on its adjusted earnings in the year ending December 2017.