"Conduit made a decision 12 months ago to split its business into two. We decided to find the best way to leverage the Client Connect business. We met with a lot of potential companies about a merger," said Conduit Ltd. investor and director Michael Eisenberg, following the merger between Conduit's Client Connect unit with Perion Network Ltd. (Nasdaq:PERI: TASE:PERI) today.
Conduit co-founder and CEO Ronen Shilo, as is his wont, avoided the limelight, and disappeared into a side room immediately after the photo op with Perion's executives.
"The link up with Perion is based on my personal acquaintance with [Perion CEO Josef] Mandelbaum. We realized that we shared common values, Zionism, and a company that would preserve the integrity in an increasingly dirty industry, and in a way that would benefit the employees," added Eisenberg.
"Together with the employees and skills of the Client Connect unit, I am confident that something great can be done here, which we all be proud of in a few years," said Mandelbaum. "This was the goal when I arrived at Perion three years ago - to build a big company."
Eisenberg said that the decision to split Conduit followed the decision to enter the end-user business, which did not fit with Conduit's core business. "It's very hard to do two things at the same time," he said.
"In three weeks, we will send a summons to shareholders, and in November we will hold a general shareholders meeting," said Mandelbaum about the deal's timetable. "I am confident that they will approval the deal. By the end of December, we will obtain the permits from Israel and the US. By the end of December, Conduit will be split and the deal will be closed in early January. Until then, we will continue business as usual. There is no pressure. Both companies are profitable and we will do this in an organized way. This isn't a marathon, but a sprint."
Commenting on the valuation of the merged company, given that Conduit has an estimated value of $1.5 billion, Eisenberg said, "The valuation was published in the media, and we have never said anything officially. Besides, the company distributed a very big dividend, so the valuation automatically fell. We'll see how the market reacts. I believe that the price will rise before the deal is closed, but the last word will be said in 12-18 months."
As for Conduit's future after spinning off the Client Connect business, Eisenberg said, "Conduit will remain a company with a lot of cash. This is a business that is growing at a dizzying rate. Although it acts as if it were a start-up, but it won't have to raise money unless the bank burns down."
Published by Globes [online], Israel business news - www.globes-online.com - on September 16, 2013
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