Perion Networks Ltd. shares jumped Tuesday on the company's plans to combine forces with Conduit Ltd.
THE SPARK: The Israeli Internet companies said Monday that Perion will be combined with Conduit's Client Connect business in an all-stock deal, which they say will establish Perion as a significant force in the search-distribution industry.
Under the agreement, Conduit will spin off the Client Connect business and Perion will issue Conduit shareholders between 57 million and 60 million shares for the unit, based on Perion's fully diluted share count at closing. After the deal is complete, Conduit shareholders will own 81 percent of Perion and existing Perion shareholders will own 19 percent of the company.
THE BIG PICTURE: Conduit, which is privately held, provides cloud-based mobile services. Perion offers instant messaging, photo sharing and other online services. The companies said that the combined company will create a top-tier search distribution company with annual revenue of $367 million on an adjusted basis.
THE ANALYSIS: Benchmark analyst Daniel Kurnos said he sees the deal as a "significant" benefit for Perion by giving it instant scale. He raised his price target on the stock to $19 from $16 and rates it a "Buy."
SHARE ACTION: Shares of Perion jumped 73 cents, a nearly 6 percent increase, to $12.47 by midafternoon. Its shares are at the upper-end of its 52-week trading range of $6.22 to $14.94.