Conduit in Talks to Acquire Perion for Some $200 Million

Israel's most highly valued Internet company is looking to go public and strengthen its presence in the global market, analysts say.

Conduit, a powerhouse Israeli software developer, is in advanced negotiations to buy Perion Networks, another software company founded by Israelis, for roughly $200 million, TheMarker has learned.

Conduit, which develops toolbars and mobile apps, completed its latest fundraising round in April 2012 at a business value of $1.4 million, making it the highest-valued Internet company in the country. Analysts speculate that Conduit is interested in a reverse merger with Perion to avoid the lengthy process of becoming a publicly-traded company. Conduit officials deny that is their goal.

Perion, which develops communications and consumer-sharing software, is traded on NASDAQ and the TASE at a market value of about $140 million. Conduit’s management has opposed going public, but doing so would enable the venture-capital funds that have invested in the company to realize their holdings. Conduit’s major shareholders are Benchmark Capital and JPMorgan Chase, which in 2012 acquired a 7% stake in the company for $100 million.

It is believed the acquisition of Perion would strengthen Conduit’s presence in the global Internet market. In 2011, Conduit bought Wibiya, an Israeli toolbar maker, for $45 million, and there are signs it may not be done. The company is part of widespread merger and acquisition talks among Israeli companies.