5 June 13 16:35–The flood of rumors over the possible acquisition of Waze Ltd. ebbed a bit this week. A synopsis of the speculation is as follows: Apple Inc. (Nasdaq: AAPL) expressed an interest in acquiring the company, but its CEO was unaware of it, or it never happened; Facebook Inc. (Nasdaq: FB) was in advanced talks to acquire the company, but withdrew its intentions because of Waze management’s insistence on keep its development center in Israel; and Google Inc. (Nasdaq: GOOG) has not yet made up its mind. The latest price tag attached to Waze, according to Israeli media reports, is between $500 million and $1 billion.
According to IVC, Waze has raised $67 million to date in three financing rounds from venture capital funds and strategic investors. Two Israeli funds are involved in Waze: Magma Venture Partners and Vertex Venture Capital; all the other investors are foreign. If we take into account the fact (regrettable in itself) that Israeli venture capital funds are also mainly financed by foreign investors, the decisive majority of the money invested in Waze came from foreigner investors. Now, according to the market rumor mill, Waze’s management faces a decision whether to give a hefty return on investment to the foreign investors who have given it their trust, or to insist on remaining an Israeli company.
I find it hard to buy this story. More precisely, I struggle to believe that Waze’s management, its directors, and investors’ representatives can sign a deal to sell the company for hundreds of millions of dollars, and that the only reason they haven’t done so is stubbornness that Waze will continue to develop its products in Israel.
If there was really a genuine offer on the table, there must have been other reasons for the refusal, such as fear that the buyer would harm Waze’s ability to continue developing a high-quality and winning product, or the threat that such an acquisition was being made to eliminate the outstanding service that Waze provides its customers, in order to pave the way for another product by a different company. Foreign investors can somehow understand and accept these reasons.
But what will these investors, who could have had a fantastic return on their investment in an innovative and special Israeli company, but lost the profits because it because it was more important to the Israelis to protect the homeboys, say?…Read More>>