Dissident Shareholders Seek to Oust Perion CEO

Designated battleground will be vote to amend company charter.

Perion Network CEO Josef Mandelbaum with Como CEO Ronen Shilo.
Ofer Vaknin

A storm has been brewing around Perion Network as three dissident shareholders have launched a campaign to oust the company’s long-serving CEO and its board, citing declining revenues and a market capitalization that has plummeted close to 90% in two years.

Ronen Shilo, the CEO and co-founder of Como, a closely-held mobile apps company once known as Conduit, is leading the charge. The planned battleground is an extraordinary shareholders meeting on September 26 where Shilo is calling for a vote on amending the company’s charter.

The aim is reform Perion’s corporate governance rules to bring about a sweeping change in top management. “The company charter makes it very difficult to make changes in management,” explained Lior Aviram, a partner at Shibloet & Company and Shilo’s attorney.

Shilo is being joined by two other Conduit co-founders, Zack and Orli Rinat,as well as Robert Leitz of Iolite Partners, a U.S. investment manager. Between them, they hold 20% of Perion – 11.7% by Shiloh, 8.5% by the Rinats and 0.06% of Iolite.

Shares of Perion, whose business is enabling developers to make money by linking their free software with search engines, ended down 0.2% to 4.81 shekels ($1.27) on Sunday, leaving it with a market cap of about 371 million shekels on the Tel Aviv Stock Exchange. Perion also trades on the Nasdaq.

When Shilo and the Rinats became Perion shareholders in 2014, Perion’s market cap briefly touched 3.2 billion shekels. They got their stock in a merger of Conduit’s Client Connect business, which included its monetization and distribution platform for publishers and developers, into Perion.

But the browser-toolbar business has gone sour under pressure from companies like Google, and Perion has failed in the last year to salvage the business and focus on new areas like mobile advertising. As part of its turnaround, Perion spent $180 million buying a company called Undertone, but the acquisition has so far not born any fruit.

“The company desperately needs a business shake-up. It’s no small matter that a company that was once worth a billion dollars now has a market cap of less than $100 million even though the Nasdaq hasn’t crashed,” said Aviram. “Shareholders can’t be indifferent, especially when the company is not showing any new initiative or acting differently.”

Shilo and his allies want to oust CEO Joseph Mandelbaum and the board, but cannot do it without amending the company’s charter. Aviram said management was shielded by the fact that only some of the board comes up for reelection in any given year, which prevents sweeping out existing management. He also cited a rule that all amendments to the charter be approved by a two-thirds majority of all shareholders, not just those who attend a shareholders’ meeting.

Aviram said that Shilo and his allies have no proposed alternative candidates for CEO or as directors.