Chinese Ad Tech Acquisitions

In the last several months, we've seen a number of relatively unexpected, and sometimes rather large purchases of ad tech companies by Chinese firms. Some of the more and less notable acquisitions include:

  1. purchase by Miteno Communication Technology for $900M
  2. AppLovin purchase by Orient Hontai Capital for $1.4B
  3. Smaato purchase by Spearhead Integrated Marketing Communication Group for $148M
  4. NativeX purchase by Mobvista for $25M

Reading through these, it's important to important to think about whether there's a trend beyond the nationality of the acquiring firms. In a little more detail, here's what the deals are about:

1) was bought by a syndicate of investors, led by Miteno - a telecom company. is a performance ad network that runs contextual text ads for big players including Yahoo and Bing. It is a rather profitable company. In this case, the vision is to help expand its technology into China leveraging Miteno's deep local expertise.

2) AppLovin is a mobile-app-install focused ad network. It only raised $4M and sold for $1.4B! It is very profitable and deeply embedded in a number of apps. It was acquired by a private equity firm that ultimately intends to sell the company, probably on the Chinese market. In this case, there is likely an arbitrage between the valuations of US ad tech companies and what they can be sold for in the Chinese market - and perhaps some local connections that can help AppLovin expand in China.

3) Smaato is a mobile ad network. It runs a medium-sized mobile-app focused ad exchange that is larger in developing markets than the US. Its acquirer is an offline marketing company that intends to use Smaato to develop mobile and in-store advertising at scale in China, tying together its offline ads with physical attribution through mobile devices. This is a true synergistic use of each company's technology with a focus on China.

4) NativeX was a small native ad tech company focusing on in-game monetization. Mobvista is an app focused ad tech player that happens to be in china. So this is a standard ad tech tech & talent deal. 

Certainly the fact that the firms are Chinese, where the internet is heavily regulated, M&A deals are often insane, and the government doesn't always act predictably makes it more notable than if the acquirers were from any other nation. As an unrelated but funny example, Marriott negotiated to buy Starwood earlier this year against competition from a Chinese insurance company Anbang. The following quote illustrates the absurdities of mergers and acquisitions in China:

Starwood and Marriott had obtained the green light for their deal from antitrust regulators in the U.S., Canada and other countries. Starwood had little insight into how Chinese regulators would react to the proposed Anbang deal. So Starwood and its advisers insisted Anbang agree that a deal would still close, and the cash would change hands, with or without Chinese regulatory approval. The Chinese company agreed. That sort of guarantee is rare and demonstrates the wariness with which some Western companies approach Chinese bidders and how intensely Anbang wanted its prize. (

This means that Anbang assured Starwood that the deal would close, even if the Chinese government ruled that the deal could not legally close! That tangent aside, there are a few notes to consider about why Chinese companies would acquire an ad tech company.

First, while this is decreasingly the case, the US market has been depressed from a valuation perspective. Companies from any other market where this is not the case could easily buy a company and sell it in their local market with better multiples applied for an easy arbitrage profit. That is at least some of the motivation behind the and AppLovin acquisitions.

Second, the Chinese ad tech market is materially lagging other more developed ecosystems, so they are eager to acquire skilled technology partners with traction or insights, explaining Smaato and NativeX.

Third, there are institutional barriers that make it hard for foreign companies to enter China, and - to a lesser degree, but still non-zero - for Chinese companies to enter the US. These cross-border acquisitions are effective mechanisms to overcome these hurdles, explaining Smaato and

All three of these reasons are likely to persist for some time to come, and thus it is reasonable to expect more acquisitions in the future. That said, not all the acquisitions happen for the same reasons, so the type of target may be very different (arbitrage deals focus on EBITDA multiples, whereas tech deals focus on, well, tech).