Conduit merges with Perion, opens window to NASDAQ listing
In a deal rumored to be in the works since July, Conduit has finally merged with Perion to bolster their product offering and client roster while paving the way to a NASDAQ listing
Privately held Israeli startup-turned mega corp, Conduit Ltd., announced today (Monday) an agreement to merge their Client Connect business with Perion Network Ltd. (NASDAQ: PERI) in an all-stock transaction that’s been rumored to be in the works since early July.
The terms of the deal will see Conduit grabbing 81% of the newly combined entity and Perion holding onto the remaining 19%. The the merged company will be able to report $367M in pro forma non-GAAP revenue and $109M in pro forma EBITDA for the 12 months ended June 30, 2013.
Backdoor to the NASDAQ
It is widely accepted that the driving motivation force behind this merger is to create a back door shortcut through which Conduit can get itself listed on the NASDAQ exchange by occupying a Perion shell and assimilating its registered details in a move commonly referred to as a reverse merger.
Such an underlying strategy would help to explain why despite being on the purchased end of the deal and carrying only a 19% stake in their new company, Perion CEO Josef Mandelbaum and CFO Yacov Kaufman will still be continuing in their current roles to head up the new entity; thereby avoiding any unnecessary complications in a deal meant to create as smooth a process as possible for Conduit to enter into the public option.
Officially the spin is being placed on the deal’s operational strategic value: “This is truly a case where one plus one equals three” says Mandelbaum, “Our businesses complement each other and will enable us to increase investment in our monetization and distribution platform, mobile efforts, display advertising and product innovation.”
Ronen Shilo, CEO and co-founder of Conduit might have spoken more to the point by saying, “We couldn’t be happier with this combination. Perion is a thriving, public company that shares our values of entrepreneurship and integrity. I have known Josef for a long time, and I can think of no one better equipped to take Client Connect forward.”
And all that is most probably true. Mandelbaum has been leading Perion in steady long term gains over the past year (for the most part) quarter over quarter, but it also happens to be convenient as well.
Conduit was founded in 2005 by Ronen Shilo, Dror Erez and Gaby Bilczyk. The company develops user engagement solutions for organizations through community Toolbars, mobile apps, notifications and Web bars. They employ over 200 people at their two offices in Forrest City, CA and Ness Tziona, Israel.
Perion, another Israeli startup was founded in 2000 with their flagship product IncrediMail, and has steadily bolstered their product suite over the years with photo and animation solutions. The company has offices in Redmond, WA and Tel Aviv, Israel.