Sources inform ''Globes'' that Russian search engine Yandex, which owns 18% of facial identification start-up Face.com, urged the sale of the company to Facebook Inc. (Nasdaq: FB) as part of its strategy to link up with Facebook. Yandex and Facebook have a mutual rival: Google Inc. (Nasdaq: GOOG).
The sources added that Face.com's Israeli investors, including Daniel Recanati's Rhodium Ventures, preferred to get cash for their shares, possibly in the realization that Facebook shares are not considered hot or stable goods. In the end, however, Facebook acquired Face.com for an estimated $60 million in cash and shares.
Face.com's founders - CEO Gil Hirsch, CTO Yaniv Taigman, chairman Moti Shniberg, and director Eden Shochat - each own 5-8% of the company and will make $5-7 million each on its sales. Private investors Yaniv Golan and Yariv Gilat own 15-20% of the company, and Face.com executives and shareholders own 5-10%.
The price tag for Face.com reflects a 150% jump in its company value since its last financing round in in September 2011, when Yandex invested $4.3 million in the company at a valuation of $23 million.
Most of Face.com's employees will likely join Facebook's HQ in Palo Alto. Based on the history of Facebook acquisitions, Face.com's senior employees will move to Facebook and Face.com will cease to operate as an independent company under its own brand. That was the fate of Israeli start-up Snaptu, which Facebook acquired in 2011. The exception to this rule was Facebook's $1 billion acquisition of Instagram.
Published by Globes [online], Israel business news - www.globes-online.com - on June 20, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012