Perion buys SweetPacks for up to $41m

Perion CEO Josef Mandelbaum says buying the emoticons app maker will enable Perion to exceed $100 million in revenue in 2013.

Perion Networks Inc. (Nasdaq:PERI: TASE:PERI) has acquired Israeli apps maker SweetIM Ltd. (SweetPacks) for $10 million in cash a 1.99 million in Perion shares, and will make two conditional milestone payments after 12 and 18 months of $7.5 million each. Total payment could reach $41 million. The closing is due within a few months.

In October, "Globes" reported that SweetPacks was seeking a buyer for $30 million, and that it had approached Perion, online translation company Babylon Ltd. (TASE:BBYL), and other companies.

SweetPacks posted $29.7 million revenue in the 12 months through September 2012, and an adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) almost of $9 million. Revenue was 89% more than the $15.7 million revenue in 2011, and almost double the adjusted EBITDA of $4.5 million.

Perion, founded in Tel Aviv in 2000, owns the brands IncrediMail, an e-mail and Facebook application for personalized communications, and Smilebox, a photo sharing app. SweetPacks, founded in 2005 with its SweetIM app for emoticons and animations for online chat and communication. It currently has more than 150 million users worldwide.

SweetPacks CEO Nadav Goshen will become COO of Perion.

Perion CEO Josef Mandelbaum said, "The acquisition significantly increases our revenues, nearly doubles our profits and expands our profit margins enabling us to exceed $100 million in revenue in 2013. This combination provides meaningful scale and adds improved back-end systems that will strengthen our competitive advantage,” added Mr. Mandelbaum. “This acquisition further accelerates our own efforts to scale, adds 22 million new users, creating a larger and more profitable company.

Mandelbaum added, "We are able to fund this accretive acquisition using cash on hand and through expected operating cash flow of the acquired entity. While the total share count will now be approximately 12 million shares outstanding, this acquisition significantly increases earnings per share."

Perion's share price was unchanged in morning trading on the TASE today at NIS 31.06, after rising 3.4% on Nasdaq yesterday to $7.80, giving a market cap of $78 million.

Published by Globes [online], Israel business news - - on November 8, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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