Israel's IronSource Set to List Its Shares via Shell Company Deal

Deal with fund Thoma Bravo would value combined entity at $10 billion

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Tomer Bar Zeev Co-founder and CEO of IronSource in 2018.
Tomer Bar Zeev Co-founder and CEO of IronSource in 2018.Credit: Meged Gozani

IronSource, one of Israel’s biggest internet companies, is in talks to merge with a special-purpose acquisitions company, or SPAC, and list its shares for trading in New York in a deal that would value the combined company at $10 billion.

Under the terms of the proposed merger and listing being discussed, IronSource would merge with the SPAC Thoma Bravo Advantage, which is seeking to raise about $1 billion in new equity to support a deal.

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The news was first reported by Bloomberg News and confirmed to TheMarker by a source involved in the listing. However, IronSource itself declined to comment, and Thoma Bravo, the private equity fund that controls the SPAC, didn’t respond to queries by Bloomberg.

IronSource had been undecided about whether to go public via a conventional initial public offering or merging with a SPAC, but Monday’s report suggests that the company has made up its mind.

SPACs, which are shell companies formed for the purposes of merging with an operating company, have become an increasingly popular route for companies, including many in Israel, to go public. Some $81 billion was raised in the United States in the first two and a half months of 2021 via SPACs, already rivaling the amount for all of 2020, according to SPAC Research.

Merging with a SPAC, often called blank-check companies, saves companies the time, costs and disclosure requirements of a conventional IPO. However, the U.S. Securities and Exchange Commission has expressed concern about the phenomenon. Last week, it issued a warning against the growing trend of SPACs backed by celebrities, urging investors to think twice before jumping in.

IronSource employs some 1,000 people and is believed to have been profitable for several years. Its current shareholders are led by the private equity fund CVC, which 18 months ago paid $450 million for a 25% stake.

IronSource was founded in 2010. After several changes in direction it focuses today on mobile internet, mainly targeted advertising for game apps. The advertising generated by IronSource offers users a richer experience than banner ads, for example providing a short game experience or an interactive video combination.

In addition to supporting the creation of both playable and video ads, IronSource’s platform manages customers’ ad libraries, analyzes their ad performance and optimizes ads based on install data.

Thoma Bravo Advantage raised $1 billion in a January IPO. Orlando Bravo is the SPAC’s chairman and Robert “Tre” Sayle is the CEO.

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