Lares Capital
Hedge fund manager, small-cap, long/short equity

Perion: A Misunderstood And Unappreciated Merger

Summary

On the morning of 09/16, Perion (NASDAQ:PERI) announced a long-rumored deal: an all stock "merger" with a much larger but private Conduit division Conduit Connect. The details of the deal are quite simple. Perion will issue 57 to 60 million additional shares, which would give current shareholders a 19% stake in the new company, Conduit and its shareholders will get the remaining 81%. The deal, expected to close in January 2014, is expected to be immediately accretive, assuming Conduit will continue to do as well as before the merger.

The market first reaction was of complete dismay, nicely summarized in this article, with PERI equity plunging at one point over 12%. While Perion recouped most of...

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