There has been significant progress in the merger talks between online translation company Babylon Ltd. (TASE:BBYL) and privately-owned mobile and online software distributor ironSource Ltd., sources inform "Globes." The sides are expected to announce that a merger agreement has been reached during October with a formal closing of the deal before the end of the year. A source close to the talks says, "The talks have been excellent and there are strong relations between the parties."
"Globes" also understands that the sides see the merged company having a valuation of $1 billion and this fact will see it listed on the Tel Aviv 25 Index from the midpoint of 2014. However, it should also be noted that the merger capital relationship between Babylon and ironSource is still fluid and is dependent first and foremost on the goodwill or lack of goodwill of which side realizes their part of the holdings, thus raising or lowering the other's share.
Since "Globes" revealed the initial negotiations for a merger in August, there has been various talk circulating on the market as to who would be chairman of the merged company. One of the names being mentioned is Shlomo Dovrat. But a source close to the topic told "Globes" that Babylon controlling shareholder Noam Lanir is expected to become chairman of the merged company. The source said, "Lanir is at Babylon to stay and not to leave."
Headquartered in Tel Aviv, ironSource was founded in 2009 by CEO Tomer Bar Zeev, COO Tamir Carmi and CTO Itay Milrad. The company began as a software distributor of free downloads that became very popular in the age of apps. Within a short space of time, ironSource became one of Google's largest partners including with assistance from Babylon in distributing translation software and other free downloads in security, computer infrastructures, and games.
ironSource's only official financing round came at the end of 2011 when it raised $15 million in a round led by Carmel Ventures. According to IVC Research, ironSource had sales of $130 million in 2012 and sales are expected to reach $220 million in 2013.
With such numbers, ironSource's founders have a legitimate reason for raising capital through a public offering, which is expected to be the next step after the merger, with an offering of the merged company on Wall Street. For its part, Babylon was mulling the idea of dual listing on Wall Street at the start of the year but stated at the time, "The right date for an offering of shares in the US has not yet been chosen."
Babylon declined to comment on this report.
Published by Globes [online], Israel business news - www.globes-online.com - on September 12, 2013
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