On Tuesday, the official announcement was made that the acquisition of Waze Ltd. is a fait accompli. In simultaneous brief low-key statements, Google Inc. (Nasdaq: GOOG) and Waze announced one of the largest deals ever in Israeli high tech. The deal is a most important milestone in Israeli high-tech history, about which much will be written. Waze's founders, executives, employees, and investors should be warmly congratulated. They have all contributed to lifting the mood in the Start-Up Nation.
There is another interesting angle to this story, which has not yet received enough attention in the outpouring of commentary - the rumor mill. This deal was characterized by a steady flood of leaks, which lasted a long time, and could be considered as a carefully planned and managed campaign.
Reports about the pending acquisition flooded various media channels for months. It sometimes seemed as if we were being fed from anonymous sources from within the conference rooms where the most sensitive negotiations were held, or came from the creative minds of "well-informed sources" who thought it proper to heat up the atmosphere around Waze, the Israeli high-tech princess.
What motivates a person to leak such a sensitive story and disclose it publicly? Is the motivation to sabotage the pending deal, when every leak is liable to drive away the potential buyer from the negotiating table? Or is it the opposite? A week ago, an American investment banker gave me an original and daring hypothesis: that the rumors around the Google-Waze deal may have been deliberate leaks, intended to raise the value of the deal by creating rivalry between potential buyers.
In deals of this kind, the future buyer usually signs the candidate for acquisition on confidentiality and exclusivity agreements, which allow the buyer to carry out due diligence with the assurance that the deal is his, if he wants it. In a world of intrigues and schemes, the candidate company for acquisition wants to check out better deals, but cannot do so because of the restrictions it has shackled itself with. It therefore leaks information to signal other potential buyers about developments in the negotiation rooms.
According to this banker's convoluted hypothesis, Waze dispersed rumors about a possible acquisition by Apple Inc. (Nasdaq: AAPL), got Facebook Inc. (Nasdaq: FB) interested, and finally leaked to the press the possible deal in order to create competition for Google.
The exact opposite can also be theorized: Apple expressed an interest in acquiring Waze, someone decided to sabotage the deal by leaking it to the press. It all worked out well, because it brought Facebook to the negotiating table, and then the hostile source again tried to sabotage the deal. But this time, too, the leak resulted in something better by bringing Google closer to the percolating deal.
In either case, it is now quite clear that the rumor mill and leaks about the Waze acquisition were no coincidence, but were carefully orchestrated by parties who had something to gain whether the process failed or if it succeeded.
As long as we are discussing leaks, "Globes" should be praised for its exclusive and accurate report on the details of the deal. In journalism terms, this is one of the most important scoops published about Israeli high tech in recent years. Yesterday, I spoke with a correspondent of one of the world's biggest news companies. From the US, he told me that he was in the final stages of submitting a story on the deal for publication, but that "Globes" scooped him by minutes about the hottest story it had covered to date. Regrettably, I was forced to admit that even though I was a regular commentator for "Globes", I had no part, not even a miniscule part, in this story, and that I read it with the same surprise as every other reader.
Another point that is important to remember in this matter: no one can blame the journalists who published the deliberate leaks about Waze in the past year. They did their journalistic duty. Even if the reports were liable to sabotage the pending deal. The people planning the next big deal should take into account that journalists are working overtime to find the next scoop about Israeli high tech. And there are anonymous sources who will be happy to help them.
The author is a general partner at Canaan Partners, managing its Israeli operations.
Published by Globes [online], Israel business news - www.globes-online.com - on June 12, 2013
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