What happened
Hot speculation inflated the stock price of French advertising tech company Criteo(NASDAQ: CRTO) on Tuesday. Following a media report that the company is attempting to put itself up for sale, its shares rose by 7.8%, a far better showing than the 1.3% gain of the S&P 500 index.
So what
The speculation comes from a Reuters article, which cited unnamed "people familiar with the matter" as claiming that Criteo is looking to put itself on the block.
According to the article's sources, Criteo has hired investment bank Evercore to advise it on a sale. The process itself began last week. The company intends to attract entities such as other businesses and private equity firms as potential suitors.
Criteo declined to comment on the Reuters article. Evercore has also stayed mum so far.
The online advertising company hasn't done badly over the years, and has typically been profitable. However, in the wake of the user privacy improvements enacted recently by tech giants such as Apple and Alphabet, it has become more difficult for third parties to track consumers' data and online activities for ad-targeting purposes.
Now what
Nevertheless, cutting-edge ad tech companies are still very much in vogue, as the potential market is vast and advertisers want every advantage they can get. It's possible, then, that Criteo will fetch a decent premium when and if it draws a suitor or several.
Investors should be cautious here, though, as the company's sale attempt is only an unconfirmed rumor at the moment. Even if it turns out to be true, Criteo might not attract a buyer, or one willing to pay a comfortable price for it.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Eric Volkman has positions in Apple. The Motley Fool has positions in and recommends Alphabet and Apple. The Motley Fool recommends Criteo and recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
