Singapore Telecommunications Ltd. (SGX: Z74, ASX: SGT; Pink Sheets: SGAPY) (Singtel) announced today that it has acquired mobile advertising solutions provider Amobee Inc. for $321 million in cash. Since it was founded in 2005, Amobee has raised $54 million from Sequoia Capital, Accel Partners, Globespan Capital Partners, and strategic investors Motorola Ventures, Cisco Systems Inc. (Nasdaq: CSCO), Telefonica SA (IBEX; NYSE: TEF; Euronext: TFA; LSE: TFE), and Vodafone plc (LSE; Nasdaq: VOD).
Amobee vice chairman Zohar Levkovitz, Gil Shulman, and Saul Rurka founded the company. It is headquartered in Silicon Valley and has its R&D offices in Herzliya. The company's software customizes ads to users of mobile phone media, such as video clips, MMS, SMS, and games. Amobee was named the "Globes" most promising start-up for 2008-09.
A fast and honorable exit
Levkovitz resigned as Amobee CEO in July 2011, and was succeeded by Trevor Healy. His appointment appeared right in view of his resume in telecommunications at Telefonica and Jajah, but behind the scenes, it was clear that his main job was to achieve a quick and honorable exit. It can be said that he impressively fulfilled his mission.
Levkovitz will make $22 million for his 7% stake in Amobee, which will be added to previous sales of shares. Sequoia, Amobee's largest shareholder with a 20% stake, is another big winner; it will receive $65 million. Accel will receive $35 million for its 10% stake, Globespan will get $50 million for its 15% stake, and Cisco and Motorola Ventures will get $15-30 million for their stakes, estimated at 5-10% each.
SingTel said that it will not greatly change Amobee's operations, and that it will operate as an independent unit under its current management. "SingTel will partner Amobee to build a strong independent company that will serve operators, publishers, advertisers and agencies with leading edge mobile advertising technology and services," it said. Amobee has 120 employees, including 55 in Herzliya.
Amobee VP engineering Gil Sheinfeld, who runs the R&D center, said that future operations could include major hiring.
Amobee is SingTel's first major overseas acquisition since 2007. The company, the largest telecom services provider in the Asia Pacific region, has 434 million subscribers in 25 countries. It had $14 billion revenue in 2011 and has a market cap of $40 billion on Singapore Stock Exchange.
The acquisition of Amobee is part of a major restructuring of SingTel, under which it will operate through business divisions, rather than on a geographical basis. It said that it plans to use the acquisition to expand into mobile advertising technology and services.
At the press conference following the announcement, SingTel Group Digital L!fe head Allen Lew said, "The way we value this company is not based on just the net tangible assets. We value this company based on what we think eventually it will be worth. The mobile marketing industry is embryonic, it has huge growth potential."
At a conference call, SingTel said that the restructuring was needed to adapt to market opportunities, and that it was necessary to acquire Amobee to utilize its technology, as it believes that the mobile advertising industry is on the verge of a revolution. "We see a $7 billion opportunity in entering this industry."
Published by Globes [online], Israel business news - www.globes-online.com - on March 5, 2012
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