The deal is worth $350 million to $375 million, with $100 million to be paid upfront once the deal is closed and a further $100 million six months later.
Finally, there will be an earn-out payment in the region of $150 million to $175 million to be paid in cash. However, this is subject to AdColony hitting future net revenue targets over the 12-month period ending December 31st, 2021.
Shareholders in Otello – AdColony's parent company – need to approve the acquisition, with the deal expected to close in the fourth quarter of its fiscal year.
"AdColony is excited to join the successful team at Digital Turbine," said Lars Boilesen, CEO of Otello.
"The underlying strategic rationale for the combination is very promising. We believe that Digital Turbine, with its extensive global relationships and distribution, will be uniquely positioned to benefit via the seamless integration of AdColony's mobile video advertising expertise and global brand advertiser awareness.
"The combination will yield a highly-differentiated and more vertically-integrated solution for the mobile advertising industry. We look forward to joining Digital Turbine to help navigate this innovation."
Currently, AdColony boasts 1.5 billion monthly users worldwide. As such, the acquisition will aid Digital Turbine in its mission to offer a comprehensive media and advertising solution. Moreover, having a mobile specialist on board will help the company to offer a better mobile experience for end-users.
We are extremely excited to announce the acquisition of AdColony today," said Digital Turbine CEO Bill Stone.
"We look forward to welcoming the AdColony team to the Digital Turbine family and believe that this strategic transaction will accelerate our growth and is a positive for our partners, advertisers, employees and shareholders.
"AdColony saw the secular tailwinds toward mobile, video and high-speed networks like 5G before most and has been able to capitalize on its vision. The ability for Digital Turbine to utilize AdColony's unique mobile advertising solutions across our vast device distribution footprint will unlock significant new monetization opportunities for the combined company's platform offerings.
"With the addition of AdColony, we will expand our collective experience, reach and suite of capabilities to benefit mobile advertisers and publishers around the globe. Performance-based spending trends by large established brand advertisers present material upside opportunities for platforms with unique technology deployable across exclusive access to inventory."
To the future
Stone concluded, "We look forward to providing more specific details regarding our forward financial projections for AdColony after the transaction has closed.
"Considering the current run-rate of recurring business at AdColony, along with expected realized synergies and the terms of consideration, we anticipate that the AdColony transaction will be substantially accretive to our expected profitability in the first full year following the transaction."