Fresh Off Merger With Conduit, Perion In Talks To Acquire Mobile Ad Platform AirPush

Mobile ad platform Airpush, which recently bought Hubbl for $15 million to move into native mobile ads, is now in the process of being acquired by Tel Aviv-based Perion. We haven’t confirmed the terms of the deal specifically, but the number we’re hearing is $170 million.*

Perion, the makers of digital consumer brands IncredimailSmilebox and SweetIM, as well as several B2B services, also recently merged with Conduit, a company founded in 2005 that became the largest Internet company in Israel for a time, thanks to its community toolbar product. Last year, Conduit spun off its toolbar division in a reverse takeover of sorts that saw it (Conduit’s Client Connect) assuming Perion’s public listing on the NASDAQ.

The merger brought Conduit’s Client Connect toolbar business and employees to Perion, which the company recently reported had been integrated “exceedingly well, even better than our expectations.”

Perion also noted following its record earnings that building a proprietary mobile distribution network was a key strategic focus going forward. Before the merger, Perion was going to see $20.1 million in earnings and $104.6 million in revenue. Post-merger, it’s now expecting profit of $103 million-$108 million on revenue of $460 million-$470 million.

Additionally, according to the WSJ, Perion CEO Josef Mandelbaum said the company is planning to diversify its revenue streams by growing its display ad business and “making acquisitions in the mobile and advertising spaces.”

While to date, Perion had been mainly a consumer-oriented software company, we hear that, going forward, it may be focusing more on its host of B2B solutions, which include tools for monetizing websites and apps, analytics and an affiliate program. (This is the part of the company where Conduit’s toolbar ended up.) For example, developers working on Perion’s consumer-facing email app, Molto, have been reassigned to other projects.

AirPush would fit in nicely with Perion’s other B2B tools, as its focus has been on helping monetize mobile applications using a variety of ad formats, including push notifications, icon ads, video and others. The company’s technology currently powers ads in over 120,000 apps, and employs approximately 230 employees, according to its website.

AirPush has offices in both L.A. and Bangalore, with some 90 percent of its staff, including the tech team, located in the latter.

The company was also in the news recently for hiring former Google Global Head of Mobile Display Matt Shaw as its first Chief Revenue Officer (CRO), ahead of what many presumed would be a possible 2014 IPO. In fact, even AirPush CEO Asher Delug told reporters that such a path was “probable.”

Despite this optimism, the reality is that the majority (~70 percent) of AirPush’s ad business in the past had involved push-based Android ads, which sold well to direct marketers like LowerMyBills, Publishers Clearing House, or Experian, for example, as well as to smaller developers, but not big brands. In aggregate those numbers could scale, however. But Google last March announced that Android developers could no longer utilize this somewhat spammy “push” ad format, forcing AirPush to turn to other ad formats and products, including an ad platform for iOS.

Last summer, the company said its ad network had reached $150 million in revenue. But the fallout from Google’s Android content policy changes may make it difficult for AirPush to hit those numbers again. 

We understand that the news of the acquisition is likely being announced at an internal meeting today.

According to AirPush CEO Asher Delug, AirPush has been involved in M&A discussions in the past, but is currently independent.

* Our initial tip on the deal came from someone outside the company who had unauthorized access to this information. We have since confirmed the deal is taking place via additional sources, and have spoken to AirPush about the unauthorized access, without revealing sources.