Outbrain Inc

Current report

Risks Related to the Transaction

Current report

The completion of the Transaction is subject to conditions, some or all of which may not be satisfied or completed on a timely basis, if at all. Failure to complete the Transaction could have a material adverse effect on the Company.

Current report

The completion of the Transaction is subject to a number of conditions, including, among others, (i) receipt of certain regulatory approvals, including those pursuant to applicable non-US antitrust laws and the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (ii) Stockholder Approval and (iii) the absence of an injunction prohibiting the completion of the Transaction, which make the completion and timing of the completion of the Transaction uncertain. Also, either the Company or Altice may terminate the Share Purchase Agreement if the Closing has not occurred by the date which is nine months after the date of the Agreement, which date may be extended for three additional periods of three months each if the reason for not closing is that the regulatory conditions have not been satisfied.

Current report

If the Transaction is not completed, the Company’s business may be adversely affected and, without realizing any of the potential benefits of having completed the Transaction, the Company will be subject to a number of risks, including the following:

Current report

•the market price of the Company’s common stock could decline to the extent that the current market price reflects a market assumption that the Transaction will be completed;

Current report

•the Company may owe termination fees to Altice under certain circumstances;

Current report

•the manner in which clients, vendors, business partners and other third parties perceive the Company may be negatively impacted, which in turn could affect its ability to compete for new business;

Current report

•time and resources committed by the Company’s management to matters relating to the Transaction could otherwise have been devoted to pursuing other opportunities that may have been beneficial to the Company; and

Current report

•the Company will be required to pay its costs relating to the merger, such as legal, accounting and financial advisory fees, whether or not the Transaction is completed.

Current report

In addition, if the Transaction is not completed, the Company could be subject to litigation related to any failure to complete the Transaction or related to any enforcement proceeding commenced against it to perform its obligations under the Share Purchase Agreement. Because the Company’s obligations under the Share Purchase Agreement are not conditioned on our receipt of or ability to obtain financing, there is a risk we could be liable for damages to Altice or subject to litigation or enforcement proceedings even in circumstances where our inability to close the transaction is due to a failure to timely obtain financing on the terms contemplated by the Commitment Letter or at all.

Current report

Similarly, delays in the completion of the Transaction could, among other things, result in additional transaction costs, loss of revenue or other negative effects associated with delay and uncertainty about completion of the Transaction.

Current report

Any of these risks could materially and adversely affect the Company’s business, financial condition and results of operation.

Current report

The Company and Teads are subject to various uncertainties while the Transaction is pending that could adversely affect their businesses, financial condition and results of operations.

Current report

During the pendency of the Transaction, it is possible that customers, suppliers, business partners and other persons with whom the Company or Teads has a business relationship may delay or defer certain business decisions or decide to seek to terminate, change or renegotiate their relationships with the Company or Teads, as the case may be, as a result of the Transaction, which could significantly reduce the expected benefits of the Transaction or negatively affect the Company’s or Teads’ respective revenues, earnings and cash flows, and the market price of our common stock, regardless of whether the Transaction is completed.

Current report

Uncertainty about the effects of the Transaction on employees may impair the ability to attract, retain and motivate key personnel during the pendency of the Transaction and, if the Transaction is completed, for a period of time thereafter. If key employees depart because of issues related to the uncertainty and difficulty of integration or a desire not to remain with the Company following the completion of the Transaction, the Company may have to incur significant costs in identifying, hiring and retaining replacements for departing employees and may lose significant expertise and talent.

Current report

The Company may not be able to integrate Teads successfully or manage the combined business effectively, and many of the anticipated synergies and other benefits of the Transaction may not be realized or may not be realized within the expected time frame.

Current report

The Company entered into the Share Purchase Agreement with the expectation that the Transaction would result in various benefits, including, among other things, operating efficiencies, synergies and cost savings. Achieving the anticipated benefits of the Transaction is subject to a number of uncertainties, including whether the businesses of Outbrain and Teads can be integrated in an efficient and effective manner.

Current report

It is possible that the integration process could take longer than anticipated or that the management of the combined organization and achievement of anticipated synergies could be more difficult than expected. The integration process could result in the disruption of ongoing businesses, processes, systems and business relationships or inconsistencies in standards, controls, procedures, practices, policies and compensation arrangements, any of which could have an adverse effect on the Company’s ability to achieve the anticipated benefits of the Transaction. The integration process is subject to a number of risks and uncertainties, and no assurance can be given that the anticipated benefits of the Transaction will be realized or, if realized, the timing of their realization. Failure to achieve these anticipated benefits could adversely affect the Company’s future businesses, financial condition, results of operations and prospects.

Current report

If the Transaction is completed, Altice will have influence over the Company, including director nomination rights, and their interests may not always coincide with the interests of the other stockholders.

Current report

The Share Purchase Agreement provides that the Company and Altice will enter into the Stockholders Agreement at Closing. Pursuant to the Stockholders’ Agreement, the number of directors on the Company’s Board will be increased by two, and Altice will have the right to nominate for election to the Board two persons, one of whom must be non-affiliated with Altice and must qualify as an independent director pursuant to the requirements of Nasdaq. Altice will have the right to nominate: (1) two directors until its affiliated stockholders cease to hold in the aggregate at least 25% of the total voting power of the outstanding capital stock of the Company, and (2) one director until its affiliated stockholders cease to hold in the aggregate at least 10% of the total voting power of the outstanding capital stock of the Company, in each case on an as-converted basis. Additionally, commencing on the third anniversary of the Closing, Altice will have the right to nominate three directors until such time as its affiliated stockholders cease to own at least 30% of the total voting power of the outstanding capital stock of the Company, on an as-converted basis.

Current report

The Stockholders Agreement also requires that until such time that Altice’s affiliated stockholders hold in the aggregate less than 15% of the total voting power of the outstanding capital stock of the Company, on an as-converted basis, Altice will take such action necessary to cause its affiliate stockholders to vote their shares at a meeting of the Company’s stockholders in the same manner as recommended by the Board.

Current report

If the Transaction is completed, Altice will receive 35 million shares of common stock and 10.5 million shares of Series A Convertible Preferred Stock. Following the Closing, Altice will own approximately 42% of the Company’s issued and outstanding shares of common stock, or approximately 48% assuming conversion of the Series A Preferred Stock (based on the amount of issued and outstanding shares of Common Stock as of June 30, 2024)

Current report

The Company will incur a substantial amount of indebtedness in connection with the financing for the Transaction.

Current report

The Company expects to fund the cash portion of the consideration for the Transaction by incurring up to $750 million of third-party indebtedness. The Company’s increased indebtedness following the completion of the Transaction could have adverse consequences, including but not limited to:

Current report

•requiring us to use a substantial portion of our cash flow to pay interest and principal, which reduces the amount available for operations, distributions, acquisitions and capital expenditures;

Current report

•making us more vulnerable to economic and industry downturns and reducing our flexibility to respond to changing business and economic conditions;

Current report

•requiring us to agree to less favorable terms, including higher interest rates, in order to incur additional debt, and otherwise limiting our ability to borrow for operations, working capital or to finance acquisitions in the future; or

Current report

•limiting our flexibility in conducting our business, which may place us at a disadvantage compared to competitors with less debt or debt with less restrictive terms.

Current report

In addition, the Company cannot guarantee that it will be able to generate sufficient cash flow to service and repay this indebtedness, or that it will be able to refinance such indebtedness on favorable terms, or at all. The failure to so repay or refinance such indebtedness could have a material adverse effect on the Company’s business, financial condition, results of operations, cash flows or market price of our common stock. If the Company is unable to service such indebtedness and fund its operations, the Company may be forced to reduce or delay capital expenditures, seek additional capital, or sell assets. Any such action may not be successful and the Company may be unable to service such indebtedness and its operations, which could have a material adverse effect on the Company’s business, financial condition, results of operations, cash flows or market price of our common stock.

Current report

The Company may not be able to obtain its preferred form of debt financing in connection with the Transaction on anticipated terms or at all.

Current report

The Company expects to fund the cash consideration for the Transaction using the proceeds of long-term financing, which the Company currently expects to include the issuance of debt securities. However, there is a risk that market conditions will not be conducive to the Company executing this financing plan with respect to the long-term financing, or that the long-term financing will not be available on favorable terms. As a result, the Company may need to pursue other options, including borrowings under the Bridge Facility, which may result in less favorable financing terms that could increase costs or adversely affect the operations of the Company.