TubeMogul Acquired On The Heels Of A Smooth Q3

Shares of TubeMogul Inc NASDAQ:TUBE) are skyrocketing on roughly 7 times its average volume on Thursday after Adobe Systems Incorporated ADBE announced a deal to buy the company for $540 million, net of cash and debt.

The deal, according to Adobe, will create the first end-to-end independent advertising and data management solution that spans TV and digital formats.

The announcement comes close on heels of its third-quarter earnings announcement made after the close Wednesday. The company reported forecast-beating earnings and revenues for the quarter and also increased its total spend, gross profit and adjusted EBITDA guidance.

Following the release, BMO Capital Markets maintained its rating on the shares of the company at Market Perform, while it lowered its price target to $8 from $10 to reflect multiple compression across industry group.

The Financial Terms

The Business Wire release said the acquisition will be done through a tender offer to buy all of TubeMogul's outstanding shares for $14 per share.

Benefits Adobe Sees From Deal

• Strengthen Adobe's leadership in digital marketing and advertising technology.
• Help Adobe customers to maximize their video advertising investments across desktop, mobile streaming devices and TV.
• TubeMogul's video advertising platform-Adobe Marketing Cloud combo to give customers first-party data and measurement capabilities from Adobe Audience and Adobe Analytics, respectively.

Adobe expects the deal to close in the first quarter of its 2017 fiscal year. The company expects the acquisition to be neutral to its non-GAAP earnings per share in 2017. However, the company said it is at a loss estimating its impact on future earnings due to the absence of certain acquisition-related cost estimates and purchase price accounting.

Minutes after Thursday's opening bell, shares of TubeMogul were soaring 81.55 percent to $13.93.