PrimeSense in strategic cooperation talks

The gesture recognition company is in talks to team with Apple, Microsoft and Samsung, one of which may acquire it for $200-300 million.

Sources inform ''Globes'' that gesture recognition software developer PrimeSense Ltd. is in strategic cooperation talks on the basis of its new processor with several major companies, including Apple Inc. (Nadsaq: AAPL), Microsoft Corporation (Nasdaq: MSFT), Amazon.com Inc. (Nasdaq: AMZN), Samsung Electronics Co. Ltd. (KSX: 5930; LSE: SMSN), and LG Electronics Corporation (KSX: 66570, LSE: LGLD). The talks could result in one of these companies acquiring it for $200-300 million sometime in the coming months.

PrimeSense, which was named one of Israel's most promising start-ups by "Globes" in 2010, has also resumed working with Microsoft. Their previous close cooperation ended with the new generation of Microsoft's Kinect used in its new Xbox One games console. At the January CES exhibition in Las Vegas, PrimeSense displayed its new Capri technology, which minimizes the sensor for very small printed circuit boards. The minimization will allow PrimeSense to sell its product for less than its previous generation processors.

PrimeSense's relations with Microsoft reportedly include the latter's right of first refusal, which gives it the right to respond to any bid for PrimeSense. Ironically, the right means that Microsoft could be the first company to write a check if it gets the impression that a rival is seeking to acquire PrimeSense.

PrimeSense was founded in 2005 by president Aviad Maizels, CTO Alexander Shpunt, Dmitri Reiss, Ophir Sharon, and Tamir Berliner. CEO Inon Beracha joined the company early on. It showed great promise in the beginning, mainly due to its close ties with Microsoft, which installed the company's technology in its Xbox 360 consoles. The relationship brought big money to PrimeSense, reportedly including almost $200 million from Xbox sales.

US private equity firm Silver Lake invested $50 million in PrimeSense in early 2011 for a 20% stake, on the basis of a high company value based on its relationship with Microsoft. Altogether, the company has raised $84.5 million from Genesis Partners, Gemini Israel Ventures, and Canaan Partners, Silver Lake, and Microsoft, as a strategic investor. At the time of the Silver Lake investment, Microsoft reportedly offered to acquire PrimeSense for $300 million.

PrimeSense's relations with Microsoft subsequently cooled, after the latter decided to use its own gesture recognition software in the Xbox One, after acquiring PrimeSense rival Canesta.

PrimeSense declined to comment on the report.

Published by Globes [online], Israel business news - www.globes-online.com - on July 16, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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