Perion Network Ltd. (PERI) rallied the most in more than six months in Tel Aviv on reports that toolbar-developer Conduit is in talks to buy the Israeli maker of Internet products at a 46 percent premium.
The shares of Perion, which makes desktop programs for e-mail, photo-sharing and web security and has an advertising revenue-sharing partnership with Google Inc. (GOOG), advanced as much as 18 percent, the most since Jan. 8, and closed 12 percent higher at 46.21 shekels in Tel Aviv. More than 623,000 shares traded, about 39 times the three-month daily average.
Babylon Ltd. (BBYL) gained 2.8 percent in above-average volume, as Conduit’s reported valuation of Perion lifted the Or Yehuda, Israel-based provider of Internet search services which also has an advertising partnership with Google.
Conduit is in advanced talks to acquire Perion for $200 million in a deal that would take the form of a reverse takeover and give Ness-Ziona, Israel-based Conduit a public listing, TheMarker business newspaper reported today on its website, without saying where it got the information. Chief Executive Officer Josef Mandelbaum declined to comment on the report. Perion’s market value after yesterday’s close in Tel Aviv was 499 million shekels ($137 million), according to data compiled by Bloomberg.
“The offer indicates that Perion was cheap and implies Babylon is cheap as well,” Beni Dekel, an analyst at Union Bank of Israel Ltd. (UNON) in Tel Aviv, said by phone today. “This shows Israeli companies are interesting and we are likely to see more of these kinds of deals.”
Perion’s 2013 enterprise value to earnings before interest, taxes, depreciation and amortization - a valuation multiple used to measure the value of a company - based on the reported deal price is 7.5 times, Dekel said, compared with a EV/EBITDA of 5.6 times for Babylon.
Perion has surged 42 percent this year after the company forecast revenue of at least $110 million for 2013, an increase of 83 percent from 2012. The company is expected to generate sales of $116 million this year, according to the median estimate of four analysts surveyed by Bloomberg. Perion CEO Mandelbaum forecast annual revenue of as much as $300 million in 2016 during an interview at Bloomberg’s New York offices on June 5.
Conduit, a maker of community toolbars and mobile applications that also has offices in California, was founded in 2005. An investment fund advised by JPMorgan & Chase Asset Management acquired a 7 percent stake in the company for $100 million, valuing it at $1.3 billion, Conduit said in April.
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