VoIP services start-up Jajah Technologies Ltd. has been acquired by Spain's Telefonica SA (NYSE; IBEX:TEF; LSE:TDE) for €145 million ($207 million) in cash, after two months of negotiations. Telefonica made the acquisition through Telefonica Europe, which operates mobile, fixed line and DSL services through the O2 label.
Jajah was founded in 2005 by chairman Daniel Mattes and Roman Scharf. The company's VoIP service can cost up to 90% less than calls made by regular telephones.
Jajah will continue to operate under its current brand, reporting into Telefonica Europe, which will be the first of the company's regional business divisions to offer seamless Jajah services to customers.
Headquartered in Silicon Valley, JaJah has an R&D center in Ra'anana with almost 80 employees. The company has almost $50 million in sales and is profitable.
Jajah held acquisition talks only with Telefonica, which first approached Jajah several months ago. There had been speculation about talks with Microsoft Corporation (Nasdaq: MSFT) and Cisco Systems Inc. (Nasdaq: CSCO).
Jajah raised $31million from Sequoia Capital Israel, Globespan Capital Partners, Deutsche Telekom AG's Venture Holding GmbH, Intel Capital, and private investors, including ICQ founder Yair Goldfinger.
Sequoia was an early investor in JaJah and will make a handsome return on its investment. Sequoia made seed-stage and first and second round investments in the start-up. Sequoia's total investment amounted to a few million dollars, and it is Jajah's largest shareholder. Sequoia partner and Jajah director Haim Sadger said, "This is a great success for the company's Israeli employees. Without them, nothing would have happened."
One of the results of Jajah's acquisition is that Telefonica, a global telecommunications operation with 260 million subscribers, is entering the Israeli market. Sadger said, "Telefonica plans to greatly expand the Israeli development center."
Published by Globes [online], Israel business news - www.globes-online.com - on December 24, 2009
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