IronSource, Supersonic Seal Merger to Form Biggest Israeli Internet Firm

The new company's valuation might top $1.2 billion as it looks forward to more M&A.

Ofer Vaknin

Digital advertising firms IronSource and Supersonic made their merger official on Thursday, creating a company with a workforce of about 800 and annual revenues of about $450 million.

The combined company will be the largest Internet firm in Israel, where about 600 of the employees will be based.

The two companies have not disclosed details on the deal, but a year ago Supersonic raised about $15 million based on a company valuation of around $100 million.

IronSource, meanwhile, is the most valuable privately held high-tech outfit in the country. In February last year it raised $25 million at a company valuation of about $1.1 billion.

Officials at the two firms have said it isn't clear which of the two company names might survive the merger. The combined firm will focus on mobile-based monetization and distribution — monetization would involve deriving a revenue stream from websites' traffic.

Supersonic

Supersonic’s first product was virtual money for gaming. Later it became a platform for app advertising in the form of video clips or banners. The company is also developing an advertising management system and a real-time exchange platform for the sale of advertising space.

Most of its advertising operations are on Facebook and in the gaming sector. Supersonic’s clients are largely big firms including Electronic Arts, Zynga and China's WeChat messaging service, as well as Expedia and Hotels.com apps.

Supersonic was founded in 2008 by Gil Shoham and Arik Czerniak; it has raised $22.5 million since it was founded. About a year ago, it said it would post 2014 sales of $70 million to $80 million, more than twice 2013’s performance.

IronSource got its start in 2008 as the developer of add-ons to the Firefox web browser. It later made its InstallCore download software its flagship product.

It generates profits from the sale of advertising on download software and still does online software distribution and monetization. It has a staff of about 550, more than 450 of them in Israel. The rest are in Beijing, San Francisco and New York.

Its annual net profit is estimated at about $100 million on revenues topping $300 million. At the beginning of the year, the company paid about $30 million in dividends.

Its chief executive, one of its founders, is Tomer Bar-Zeev. In February, in connection with a funding round, Bar-Zeev said money had been raised to accelerate growth. “The year 2015 will be a year of acquisitions,” he said.