| TEL AVIV, June 30
TEL AVIV, June 30 Israel-based Perion Network
agreed to buy Grow Mobile Inc of San Francisco for up
to $42 million in cash and equity to expand its offering for
mobile application advertising.
Perion said on Monday $17 million in cash and equity will be
paid at closing and up to an additional $25 million in cash and
equity may be paid over the next two years, contingent upon
reaching certain revenue and profit milestones.
Grow Mobile's platform enables developers of mobile
applications to buy and track campaigns to boost the number of
The mobile advertising market is expected to see "explosive
growth in the coming years", but is fragmented and inefficient,
Perion said. A developer seeking to advertise a mobile app must
connect to numerous traffic sources.
"Once you get a lot of traffic you need to get revenue,"
Perion Chief Executive Josef Mandelbaum told Reuters.
Perion's technology helps developers distribute their apps
and make money off them through advertising. It competes with
companies like IAC/InterActiveCorp, Blucora Inc
and Israel's ironSource.
"We are all very strong on desktop. None of us is strong in
mobile," he said. "Our biggest focus right now is mobile."
Grow Mobile was founded less than two years ago and is
profitable. This past year, it managed advertising campaigns in
excess of $20 million with triple digit year-over-year revenue
growth in the last quarter. Grow Mobile's clients include
Walmart and Zynga.
The deal, due to close in the third quarter, will be
accretive to Perion's 2014 financial results.
Perion has forecast 2014 revenue of $460-$470 million and
net income of $103-$108 million, up from revenue of $104.6
million and profit of $20.1 million in 2013.
The forecasted surge in revenue and profit is due to its
acquisition in January of the much larger ClientConnect business
from Israel's Conduit in an all-stock deal worth $660 million.
ClientConnect, which had revenue of $325.5 million and net
profit of $86.7 million last year, brought Perion a platform to
give mobile app developers a way of improving their distribution
and money making capabilities.
(Reporting by Tova Cohen)