Israeli software company Somoto (TASE: SMTO) has signed a non-binding Memorandum of Understanding (MoU) for the acquisition of 100% of a North American company operating in the video sector with offices in Israel. The deal is for up to US$3.5 million in cash and shares and up to $11 million based on milestone payments. The company being acquired is engaged in Internet advertising and generated revenue of about $4 million in the first four months of 2017, and reported an operating profit before deducting EBITDA of about $900,000.
Somoto is an Israel-based global software company specializing in Internet marketing, video and mobile advertising, and providing distribution services for content and applications to the PC Win, PC Mac, Mobile Android, and Mobile iOS environment Completion of the deal is expected to take place during September 2017.
Somoto CEO Ben Garrun said, "The acquired company possesses a growing presence in the North American market. We expect that the acquisition of its existing activities will provide us with access to first rate advertisers and advertising space, which until now we did not have access to. The target company is a young company but its managers bring with them many years of experience in the field of video advertising and in the international market. The acquisition is part of our rapid strategic growth to expand out areas of activity and to enlarge the volume of our operations and profit in order to promote Somoto into a major and well positioned company, while creating value for our shareholders. In our estimates, acquiring the target company will create significant added value and major synergy for Somoto's current operations in the video sector, which represented about 63% of Somoto's total revenue in the first quarter of 2017."
Published by Globes [online], Israel business news - www.globes-online.com - on June 4, 2017
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