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Privately-held Conduit is splitting into two businesses, and could conduct a reverse merger with publicly-traded Perion.
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/ Roy Goldenberg and Shmulik Shelach /
During the past year, Perion Networks Inc. (Nasdaq:PERI: TASE:PERI) (formerly IncrediMail) has whetted investors’ appetites as the emoticon maker’s market cap tripled to $146 million.
One of the reasons for the rally was revenue from Perion’s collaboration with Google Inc. (Nasdaq: GOOG) and Microsoft Corporation’s (Nasdaq: MSFT) Bing, to which Perion directs its users. It is therefore natural for Perion to become part of another, larger company which applies the same strategy, in order to continue on its way. Today, it has been reported that Conduit Ltd. is in talks to acquire Perion for $200-250 million, a huge premium on its market cap. Perion’s share price rose 13.7% by mid-afternoon on the TASE and 7% in premarket trading on Nasdaq.
The acquisition, if made, could be part of a large move by Conduit to exploit Perion’s public platform for a reverse IPO and dual list on Nasdaq and the Tel Aviv Stock Exchange (TASE).
Conduit said that it was splitting into two business entities in order to maximize it activity. Perion has declined to comment.
Perion was founded in 2000 by cousins Ofer and Yaron Adler with an e-mail application, in order to simply use of the medium. A few years later, it changed its strategy and now focuses on solutions for the digital space, ranging from creative desktop solutions to images sharing.
Like Perion, Conduit bases its revenue on collaborations with Google and Bing. Founded in 2005 by CEO Ronen Shilo, it has an estimated company value of $1.4 billion, making it one of Israel’s largest private companies. It started out as a developer of toolbars, but in the past two years has branched out, launching mobile apps for changing the lock screen on Android devices for brands to promote content, offer social features and higher consumer engagement. In September 2012, it launched the U Internet browser, based on the open code behind Google’s Chrome, which interfaces with social networks to present Facebook and Twitter updates and to converse with friends via Facebook and Gmail.
A possible merger with Perion is part of the Conduit’s larger plan. Part of the company will focus on toolbars, and another part will be spun off to handle mobile operations. Shilo will no longer manage the toolbar business, but stick with the mobile operations.
In view of Conduit’s success, the mobile company will be an interesting development. If the new business requires new investors, the natural partners will be Conduits current investors, including Benchmark Capital or partner Michael Einsenberg’s new venture capital fund, Aleph, which he founded with Eden Shochat.
Published by www.globes-online.com
