Nexstar Buying LKQD Technologies For $90M

Nexstar Media Group said this morning that it has a definitive agreement to buy LKQD Technologies, an independent video advertising infrastructure company, for approximately $90 million cash.

Nexstar said the transaction “is expected to be immediately accretive to Nexstar’s operating results and free cash flow, does not materially alter the company’s leverage position and will be financed with cash generated from operations and funds provided by the company’s revolving credit facility.”

Founded in 2014 by industry veterans, LKQD Technologies’ video advertising platform “has the largest reach in the U.S. to viewers across digital devices,” according to Nexstar. The acquisition of LKQD, Nexstar added, “substantially broadens and diversifies Nexstar Digital’s portfolio with industry-leading, brand safe systems and technologies that are complementary to its current offerings of leading digital solutions and services for media publishers, and compelling and effective multi-platform marketing solutions for local and national advertisers.”

LKQD provides enterprise digital video advertising technology infrastructure for publishers and advertisers on all screens reaching approximately 115 million U.S. online video viewers across desktop, mobile-web, mobile-app and connected TVs. Designed for flexibility, scalability and speed, LKQD’s Infrastructure as a Service (IaaS) technology provides end-to-end systems for ad serving, mediation, programmatic auctions and advanced reporting — allowing publishers to book, manage, optimize and track their operations in real-time from one dashboard.

Nexstar added: “LKQD’s large-scale, diversified video supply combined with Nexstar’s robust audience reach across 170 stations and 100 U.S. markets and significant hyper-local digital/mobile platforms, will create new video opportunities which will allow Nexstar’s advertising clients to target their customers across both the television and digital video landscapes.”

Over the past 12 months LKQD expanded its technology to meet increasing demand for its products and solutions among digital publishers, media partners and advertisers. As a result, Nexstar said, “in the first half of 2017, LKQD tripled the number of customers using its platform and generated year-over-year gross revenue growth of 180%, outpacing overall video advertising industry revenue growth by approximately eight times.”

Perry A. Sook, Nexstar chairman, president and CEO, added: “Our acquisition of LKQD is consistent with our long-term strategic and financial growth objectives for Nexstar Digital as we unify, expand and invest in our technology platform to optimize results for our clients, while developing new revenue opportunities. By adhering to our disciplined acquisition and integration criteria, we are acquiring the leading, fast-growing, profitable, online video advertising business at an attractive, accretive valuation. Looking ahead, we continue to evaluate additional digital investments and select accretive transactions to drive the next phase of growth and success for Nexstar Digital.”

Gregory R. Raifman, president of Nexstar Digital, said: “The acquisition of LKQD significantly strengthens and expands Nexstar Digital’s product offerings with flexible and scalable end-to-end technology infrastructure systems that enable cross-device ad delivery with multi-dimensional analytics and reporting — giving buyers and sellers the power to efficiently reach audiences across all screens and devices. LKQD’s rapidly growing revenue, expanded client base and market-leading enterprise video ad technology infrastructure are key differentiators and represent an excellent strategic fit with Nexstar Digital’s leading local digital marketing tools, content monetization solutions and digital agency services.

“Importantly, in an environment where brands and ad buyers are rightfully concerned with online ad safety, LKQD’s inventory is among the highest quality in the ecosystem. This focus results in industry-leading metrics with respect to mitigating fraudulent traffic and ensuring brand safety. LKQD brings to Nexstar Digital a leading, fast-growing, profitable, online video advertising business that will enable us to further improve our competitiveness with other media and deliver more brand safe solutions to advertisers and brands.”

Senior members of the LKQD management team, including CEO and Co-Founder Brian DeFrancesco and CTO and Co-Founder Christophe Clapp, have entered into employment agreements with Nexstar and LKQD will continue to operate as a division of Nexstar Digital.

DeFrancesco said: “This is a win-win for clients on both sides, as Nexstar’s suite of local and national digital marketing products, content monetization solutions and digital services combined with LKQD’s end-to-end digital video advertising infrastructure technology, will allow small and mid-sized media publishers and businesses to maximize revenues across every available channel. Nexstar Digital has a strong position in the rapidly growing digital media and advertising technology market and we are excited to join their team as Nexstar’s resources and expertise will help power LKQD’s next phase of growth as we continue to expand our brand, technology capabilities and market presence.”

The transaction is expected to close late in 2017 or the first quarter of 2018 and is subject to Hart-Scott-Rodino approval and other customary closing conditions.