Services/apps mobile

Opera in $1.23B M&A Drama

Mobile browser and applications specialist Opera Software is to be acquired by a consortium of Chinese investors for 71 Norwegian kroner (US$8.32) per share, equivalent to about NOK10.5 billion ($1.23 billion), the company announced early Wednesday. (See Opera Agrees $1.2B Sale.)

The "Golden Brick" consortium funding the acquisition comprises digital games specialist Kunlun -- which distributes Angry Birds in China and recently acquired a majority stake in dating app specialist Grindr -- digital security software vendor and app store operator Qihoo and two finance firms, Golden Brick Silk Road Fund Management and Yonglian Investment.

Opera Software ASA , which initiated a review of its strategic options in August 2015, says the deal will provide a ready-made partner ecosystem for the Chinese market as well as additional financing. The deal will also open up the opportunity for Kunlun and Qihoo to "cross-sell their products and services to the Opera user base and benefit from Opera's leading mobile advertising platform," the Norwegian company noted.

"There is strong strategic and industrial logic to the acquisition of Opera by the Consortium… [which] with its breadth of expertise and strong market position in emerging markets, will be a strong owner of Opera," noted Lars Boilesen, Opera's CEO, in the company's official statement.

Opera's share price gained 37% in morning trading on the Oslo exchange to reach NOK66.9 ($7.84), just short of the agreed sale price.

News of the deal came as Opera reported much better than expected fourth-quarter financials, with revenues of $193.5 million way ahead of its forecast due to a "major acceleration in mobile advertising revenue," which accounted for $145.4 million of the total.

Full-year revenues came in at $615 million, in line with the $600-618 million range announced when the company issued a profits warning last August but far short of its previous expectations of $630-650 million.

The coming year, though, is expected to see significant growth, even without help from Opera's prospective new owners: The company expects 2016 revenues to be in the range of $690-740 million and its adjusted earnings to be in the range of $100-125 million, compared with $108 million in 2015. (See this earnings release.)

For all the latest news from the wireless networking and services sector, check out our dedicated mobile content channel here on Light Reading.

The Opera team will be keeping a close eye on net neutrality-related developments through 2016 as it looks to expand its reach, as decisions such as the recent one by India's Telecom Regulatory Authority of India (TRAI) could affect the uptake of toll-free mobile data services and limit Opera's potential growth. (See India Deals Death Blow to Facebook's Free Basics .)

CEO Boilesen discussed the toll-free mobile data phenomenon with Light Reading at last year's Mobile World Congress, when he seemed unconcerned about potential resistance to "zero rated" services. (See Opera Sees Toll-Free Data Catching On.)

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

kq4ym 2/19/2016 | 11:42:50 AM
Re: On paper, this could be dynamite It was surprising to me that Opera was to be sought after by the Chinese consortium. But, with it's vast market there, and lots of venture money floating around, it probably does make some financial sense, or at least a reasonable gamble for the group.
danielcawrey 2/11/2016 | 9:35:32 PM
Re: On paper, this could be dynamite I would not have thought Opera was so valuable. It seems they make more money than say Firefox, with a hefty chunk in mobile. China is certainly a growing market, and that country is looking to beef up its technology investments because its market is so unique. I'll be following this closely. 
[email protected] 2/11/2016 | 5:55:27 AM
On paper, this could be dynamite Companies with massive markets in China, and one with majority ownership of a popular dating app, take over a company that has a pedigree and experience in mobile device advertising and user engagement.... on paper this could be massive, especially in terms of the export of the apps and games devekoped by the new owners for the Chinese market and for Opera's expansion in China.


Getting it frmo 'on paper' into dollars and dimes, though, is a big leap. INteresting that the acqusition came as Opera started to experince a significant uptick in that advertising business - good timing for the buyers.
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