Two big high-tech acquisitions were reported on Sunday with a combined value that could reach $620 million.
ironSource is buying another Israeli ad-tech company, Supersonic, in a deal estimated to be between $200 million and $300 million, as it looks to beef up its presence in the mobile segment. Meanwhile, the Israeli cybersecurity startup Adallom was reportedly bought by Microsoft for $320 million.
Industry sources said Supersonic, which operates mainly in the Facebook segment and whose flagship product is a kind of virtual money for use in online games, will help ironSource more deeply penetrate the mobile segment, since most Facebook and social media activity is done over mobile devices. ironSource is not operating in the Facebook environment at all right now.
Most of the Supersonic deal will be in shares, with only a tiny portion in cash. ironSource, the bigger of the two companies, will lead the merger and manage the combined company.
Supersonic, which operates out of Silicon Valley with a Tel Aviv research and development center, will become the U.S. arm to the combined company, whose headquarters will remain in Tel Aviv, where ironSource is based.
Supersonic was formed in 2009 and raised $15 million a year ago at a company valuation of $100 million. ironSource, which may be Israel’s biggest closely held technology company, raised $25 million in February 2014, at a valuation of $1.1 billion.
But ironSource has so far failed to pull off an initial public offering at a valuation that would satisfy its investors. The company had been seeking to go public at a $1.5 billion valuation, but changing tastes in the IPO market in the last year have made it increasingly difficult for ad-tech companies. It was this environment that made Supersonic’s backer amenable to a mostly stock merger.
Adallom, which offers security products to protect companies’ cloud-based software, raised $30 million as recently as April in a financing round that valued it at $100 million. Investors included HP and the data-storage company EMC, as well as venture capital funds Sequoia Capital, Index Ventures and Rembrandt Venture Partners.
Since it was founded three years ago by three graduates – Assaf Rappaport, who is now CEO; Ami Luttwak; and Roy Reznik – of the Israel Defense Forces’ renowned 8200 intelligence unit, the company had raised a total of $49.5 million. Based in Menlo Park, California, it employs 90 people, 50 in R&D in Israel, and counts LinkedIn and SAP among its clients.
Microsoft is expected to keep the company’s R&D operation in Israel and double the number of staff within the next year.
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