It's official: ironSource to list via SPAC at $11.1b valuation

ironSource management  credit: Adam Frimer
ironSource management credit: Adam Frimer

Israeli adtech platform ironSource will be merged into Thoma Bravo Advantage, set up by US private equity firm Thoma Bravo.

Israeli company ironSource, a platform for game and app developers, is to be merged into SPAC Thoma Bravo Advantage (NYSE: TBA) at a valuation of approximately $11.1 billion

ironSource CFO Assaf Ben-Ami told "Globes" that the planned deal, which will yield $2.3 billion for the company and its investors, would be "the biggest transaction ever in Israel, at least as far as we recall." $800 million will go to the company and $1.5 billion to investors selling shares in the secondary element of the transaction. Ben-Ami said that ironSource would enable all shareholders, including company employees, to sell their shares in equal proportions. ironSource employees hold options amounting to 10% of the company, which means that they will gain a total of about $150 million.

The company was founded in 2011 by its CEO Tomer Bar-Zeev and brothers Roi, Eyal and Itay Milrad. Thoma Bravo Advantage is a company set up by US private equity firm Thoma Bravo (which in the past bought Imperva, of which Shlomo Kramer was a founder, for $2.1 billion). The deal is expected to provide up to $2.3 billion in cash proceeds (a portion of which will be used for purchases from ironSource equity holders), including an oversubscribed PIPE (private investment in public equity) of $1.3 billion and $1 billion of cash held in the trust account of Thoma Bravo Advantage, assuming no redemptions by public shareholders.

According to IVC, ironSource has so far raised $120 million. Among its investors are the foun ders (estimated to hold about one third of the company), Viola Ventures, Tal Barnoach's Disruptive Technologies Venture Capital , 83North, Saban Ventures, Leumi Partners, and Clal Industries. According to IVC, in 2019, private equity fund CVC Capital Partners bought about a quarter of the shares in ironSource for $400 million in a secondary deal in which the company itself did not raise money.

ironSource, formerly known as FoxTab, began as a developer of add-ons for the Firefox browser. Over the years it underwent several mergers, which expanded the number of its recognized founders to eight, with the addition of Arnon Harish, Tamir Carmi, Nethanel Shadmi , and Omer Kaplan. The company eventually switched to a focus on advertising in apps, and today it offers a platform that enables app developers, mainly of games, to incorporate advertising into their products.

In its presentation to investors, ironSource revealed financial details of its activity. In 2020, it recorded revenue and adjusted EBITDA of $332 million and $104 million, respectively, growing revenue at 83% year over year. The announcement of the deal states, "With ironSource's core addressable market projected to grow to as much as $41 billion by 2025, the combination with Thoma Bravo Advantage creates a public company positioned for significant long-term growth and value creation."

"Joining forces with Thoma Bravo Advantage to bring ironSource to the public markets presents an opportunity to partner with the world's leading software investor to achieve the next level of growth," said Bar Zeev. "Despite our previous progress pursuing a traditional IPO, when we met with Thoma Bravo Advantage we found an alignment of vision and shared conviction about the long-term growth we can drive at ironSource that made them the perfect partner as we take this next step in growing our company, and the market as a whole."

"As one of the fastest-growing and most innovative platforms for building and scaling businesses in the app economy, ironSource is well-positioned for continued success as a public company," said Thoma Bravo founder and managing partner Orlando Bravo. "With a full suite of solutions across the app growth life cycle - and a unique combination of scale, business growth, and profitability - we expect ironSource to further its market leadership position as a public company. We look forward to partnering closely with Tomer and the talented ironSource team in this exciting next chapter for the company."

"This is a very proud moment for us at Viola and for me personally. A company where we were the first investors thrives and goes public as one of the largest public tech companies in Israeli history," said Shlomo Dovrat, co-founder of Viola Ventures and a board member at ironSource. "We look forward to continuing to work with the amazing founding team of ironSource on their incredible journey."

The announcement of the transaction states, "ironSource powers the business growth of 87% of the top 100 games, and has been ranked multiple times as one of the top 3 platforms for driving both quality and scaled user growth by leading industry indexes. In addition, 14 of the 19 games published through the ironSource platform were ranked in the top 10 most downloaded games on either the Apple App Store or Google Play Store over the course of 2020, and one of them - Join Clash - was the most downloaded game in the world in February 2021."

After the transaction, assuming no redemptions by Thoma Bravo Advantage shareholders, ironSource is expected to have approximately $740 million of unrestricted cash. Total consideration to ironSource shareholders will be $10 billion, comprising $1.5 billion cash and a majority of the shares of the combined company.  The combined company will retain the ironSource Ltd. name.

Goldman Sachs & Co. LLC, Jefferies LLC and Citigroup Global Markets Inc. are serving as financial advisors to ironSource, and Latham & Watkins LLP and Meitar | Law Offices are serving as legal advisors to ironSource.

Kirkland & Ellis LLP, Goldfarb Seligman & Co. and Cadwalader, Wickersham & Taft LLP are acting as legal advisors to Thoma Bravo Advantage.

Goldman Sachs & Co. LLC, Citigroup Global Markets Inc. and Jefferies LLC acted as PIPE placement agents.

Published by Globes, Israel business news - - on March 22, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

ironSource management  credit: Adam Frimer
ironSource management credit: Adam Frimer
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