Summary

  • Taboola’s recommended acquisition offers 64p in cash for each Dianomi share plus a Contingent Consideration Unit that may eventually deliver between zero and 24p.
  • The extra value has two commercial gates: selected publishers must move onto agreements containing Taboola’s exclusivity, code-on-page and minimum 24-month terms, and revenue from those migrated publishers must then clear a forecast-based test.
  • The formula pays nothing at a Relevant Percentage of 50% or less, 12p at 75% and 24p at 100% or more, with straight-line outcomes between those points.
  • RBC confirmed funds for the 64p cash consideration, not for the CCUs. The scheme also remains conditional on shareholder votes, court sanction and the CMA process despite irrevocable support over 75.3% of issued shares.

Taboola’s proposed purchase of Dianomi is easier to understand as two transactions placed on top of each other. The lower layer is a conventional takeover payment: 64 pence in cash for every share, valuing the fully diluted equity at about £19 million. The upper layer is not cash at completion. It is a contractual claim on the success of a specific integration programme and can be worth nothing.

That distinction gets lost when the offer is described only as “up to 88p” or an equity valuation of “up to £27 million”. Those figures assume the Contingent Consideration Units, or CCUs, deliver their full 24p. The same problem affects the headline premiums. The fixed cash is 68% above Dianomi’s 38p closing price on 17 September, 114% above the three-month volume-weighted average and 350% above the six-month average. The larger 132%, 194% and 519% figures belong to the maximum scenario, not the funded floor.

First gate: publishers must change contracts

The CCU is built around a list of “Agreed Dianomi Publishers” that is not disclosed in the announcement. Revenue from a publisher counts in the numerator only if its existing arrangement has been replaced or amended into a “New Publisher Agreement” by the end of the measurement period.

That definition is demanding. The new contract must incorporate Taboola’s standard provisions on exclusivity, code-on-page placement and duration: at least 24 months with no termination for convenience or similar escape. It may also include other standard terms agreed by the relevant parties. The contingent price is therefore not merely a reward for keeping revenue. It pays for converting part of Dianomi’s publisher base into longer and more exclusive distribution relationships.

Publishers are not parties to the takeover agreement and cannot be compelled by the 75.3% shareholder support. They decide whether the revised commercial package is acceptable. A publisher could stay with Dianomi on its old terms, renegotiate slowly or leave. In each case, even genuine revenue may be excluded from the CCU numerator if the qualifying contract gate has not been passed.

Second gate: migrated revenue must meet the forecast

Contract migration is necessary but insufficient. The assessment then compares actual aggregate net revenue from qualifying migrated publishers during a six-month Revenue Calculation Period with the agreed forecast net revenue for all agreed publishers. Both sides of the comparison deduct pass-through costs paid to publishers.

The measurement period begins on the later of 1 January 2027 and the first day of the first full calendar month after the acquisition becomes effective. The Relevant Percentage produced by that ratio determines each loan note’s principal. At 50% or below, the value is zero. At 75%, it is 12p. At 100% or above, it is capped at 24p. Between 50% and 100%, the calculation is linear.

This denominator matters as much as the revenue. The agreed forecast and the publisher list are not public, so an outside investor cannot independently calculate the likelihood of any payout from the announcement alone. The visible formula is objective once its inputs are known; the commercial difficulty lies in producing the inputs.

A contingent right, not another share or cash instalment

The CCUs confer no equity ownership, vote, dividend or capital-return right in Bidco. They are unsecured, generally non-transferable, unlisted and issued in certificated form. If the assessment yields a positive amount, each CCU converts into a loan note with that principal. The note is also unsecured and generally non-transferable, normally pays no interest, and is redeemed for cash six months and one day after issue. If the value is zero, no note is issued.

Financing follows the same split. RBC Capital Markets said Taboola Group cash is sufficient for the 64p cash consideration. Bidco was not required to confirm—and did not confirm—resources for the CCU payments. Those payments are expected to come from future cash flow and cash resources. This does not mean they will fail; it means the financing assurance attached to the floor does not attach to the ceiling.

Sources