The world of M&A is often hailed as a high-stakes game of strategy, negotiation, and a touch of luck. At Datasite’s recent M&A breakfast in Luxembourg, Siska Ghesquiere, General Counsel and Head of M&A at RTL Group, shared insights into the challenges faced during the sale of subsidiary SpotX to Magnite, a journey that ultimately culminated in a deal that valued SpotX at $1.17 billion when the disposal was announced in February 2021.

The Background
RTL Group, a major European broadcaster, entered the digital advertising technology space in 2014 by acquiring a 65% stake in SpotX, a company specializing in providing a comprehensive platform for the monetization of digital video advertising. It later increased its stake to 100%. Through this acquisition, RTL gained valuable insights into the rapidly evolving landscape of programmatic selling of digital video advertising.

The decision to sell SpotX arose in 2019, driven by a strategic evaluation that led RTL to focus on its European ad-tech businesses. An initial attempt to integrate SpotX with these businesses in Europe faced challenges, prompting RTL to initiate a sale process.

The Challenges
The timing of the sale process proved to be a pivotal challenge. Launching the sale in January 2020, just as the COVID-19 pandemic emerged, raised uncertainties about market dynamics. The question of whether potential buyers were hesitant due to the nature of the asset or the broader economic uncertainties loomed large.

The management team at RTL faced a critical decision point. Should they continue the process, halt it until the pandemic's uncertainties cleared, or put it on hold with the possibility of restarting later? Option two, a pause until the uncertainties eased, was chosen, presenting its own set of challenges, particularly around management and bidder expectations.

Undeterred by the inability to conduct in-person meetings and site visits due to travel restrictions, RTL resumed the sale process in September 2020. The decision to proceed without physical interactions was a leap of faith, proving that even in the virtual world, significant business transactions could be successfully executed.

The sale took unexpected turns as bidders teamed up and new players entered the arena after initially not showing any interest, introducing further complexity but also opportunities.  As the process unfolded, deal certainty became a critical factor alongside valuation.

The Outcome
After numerous rounds, strategic shifts, and negotiations conducted through the virtual maze, the deal was signed with Magnite on February 4, 2021, for $1.17 billion of which $560 in cash and the remainder in shares (based on the closing price of Magnite stock as of February 4, 2021). The journey, which began with strategic uncertainties and the global pandemic, concluded successfully in April 2021 after addressing regulatory clearances.

The Learning
The sale of SpotX to Magnite exemplifies how strategy, adaptability, and resilience are required in the dynamic world of M&A. It underscores the importance of making tough decisions amidst uncertainty, leveraging virtual platforms for deal execution, and ultimately, achieving success in a landscape where variables are constantly shifting.

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