Israel's Babylon to Meet With Yahoo Executives to Save Contract

Shares in the software company dropped 15% over two days as investors worried about the possible end of a contract that might jeopardize a takeover by software firm IronSource.

Israeli search and translation software company Babylon tried to calm investors Tuesday after it said it was meeting with Yahoo executives in the evening to save its contract with the Internet giant.

Babylon's shares tumbled 15% over two days after the company announced that it had received a letter from Yahoo alleging several violations of the contract.

"Yahoo stated in its letter that it was giving the company until Monday evening to fix the problems and that after that date it would assess the situation," Babylon said in a statement. On Tuesday the stock was up nearly 3%.

Yahoo is responsible for 30% of Babylon's revenues. Another problem is that the cancellation of the contract might jeopardize Babylon's planned merger with software firm IronSource.

The tie-up was set to take place in the coming weeks, with IronSource shareholders to receive two-thirds of the merged company, whose market value could reach as high as $1.2 billion.

Reuters