'Conservative YouTube' Rumble looks to bolster cloud business with $4.5 bln merger

Video-sharing platform and cloud services provider Rumble, which hosts Trump-founded Truth Social, plans to buy German data-infrastructure company Northern Data Group. The result would be a player worth about $4.5 billion. The market reaction was mixed: shares of Rumble jumped 3% yesterday, August 11, while Northern Data plunged more than 19%.

Rumble is considering acquiring Germany's Northern Data Group, the sides said. Under the terms of the offer, each Northern Data share would be exchanged for 2.319 newly issued shares of Rumble. The potential deal would result in around 33.3% total pro forma ownership in Rumble for Northern Data shareholders.  

Bloomberg writes that the deal would create a combined entity that’s worth about $4.5 billion, based on their latest market values. Still, the deal is a massive discount to the as much as $16 billion valuation Northern Data was aiming to get in a U.S. IPO for its combined AI cloud and data center businesses.  

Tether, the issuer of the stablecoin of the same name, has voiced its support for the deal. The company is currently Northern Data’s biggest shareholder, and completion of the offer would make it the single largest holder of Rumble common stock, Barron's noted.

Still: no decision has been made to launch the offer, the German company stressed. It is evaluating it and indicated its willingness to entertain further discussions with Rumble.

The market reaction to the news of the Rumble offer was mixed. Shares of Rumble jumped 3% yesterday to $8.12 apiece, while shares of Northern Data sank more than 19% on the Frankfurt Stock Exchange to EUR18.61 apiece, a two-year low. In trading today, however, Northern Data has rebounded 5% in the first hours.

Rumble is a "conservative alternative" to YouTube. It recently pushed into the cloud market, trying to compete in an industry dominated by cash-rich Silicon Valley giants, Bloomberg writes. It launched its cloud service for other companies last year.  

On Sunday, August 10, the company reported a 12% year-over-year increase in revenue for the second quarter to $25.1 million, along with a nearly 13% increase in the net loss to $30.2 million. The number of Rumble monthly active users continued to decline: quarter over quarter, it fell nearly 14% to 51 million, the company said.

Started as a crypto mining operation, Northern Data has shifted to marketing to companies developing AI tools. It now has three main businesses: cloud computing services in Europe (Taiga), data centers (Ardent), and crypto mining (Peak Mining). The latter will be sold before completion of the deal, and the proceeds will be used to pay down debt owed to Tether.

The AI translation of this story was reviewed by a human editor.