Deal Reporter
Opera Software’s [STO:OPERAO] 350m strong customer base is expected to attract bid interest from Chinese internet companies, a source close to the situation and an industry source said.
These companies are looking to expand overseas and would be particularly attracted to Opera’s presence in emerging markets, such as India, the source close said.
Bidders, such as Cheetah Mobile [NYSE:CMCM], Baidu [NASDAQ:BIDU], Tencent [HKG:0700] and Alibaba [NYSE:BABA] are among those who could be interested in Opera Software as a whole, the two sources and a top-ten shareholder said.
Opera Mini, the company’s flagship mobile browser, reached 50m users in India last year to become the third most popular mobile application there behind Facebook and WhatsApp.
Beijing-based mobile phone distributor Telling Telecom [SHE:000829] could be interested in purchasing the browser business alone, a private equity source said. Telling formed a joint venture with Opera in 2011 to develop the mobile browser business in China.
The JV ranked third in terms of mobile browser market share in China, according to a local news report in 2014. Telling’s interest could be limited to just the Chinese browser division, however, the private equity source said. A spokesperson at Telling Communication said he has no knowledge of the situation.
Opera, which provides cloud-based mobile services to operators, publishers and advertisers, launched a review of its business on Friday 7 August after receiving “strategic interest” from a number of parties.
The two most likely outcomes of the review are a sale of its mobile advertising division, Opera Mediaworks, or a sale of the whole company, the source said. The preferred result would be a sale of its mobile advertising division, he added.
After seeing impressive growth at the start of 2014, the division is now seen as in decline, the source said. In August last year, the company said Opera Mediaworks was responsible for over 50% of the company’s revenues.
Opera Mediaworks reported revenues of USD 51.1m in the second quarter of 2014, up 83% on the same period in 2013.
Opera Software’s revenue growth led Dealreporter to identify the company as an attractive investment for private equity firms in August last year. The Flash said any private equity bidders would face competition from strategic buyers, noting historic speculation that Facebook, Google and Yahoo could bid.
The mobile advertising business is thought to have attracted several approaches over the last few years, the shareholder said.
Companies openly looking for advertising technology expertise could approach Opera for the division, the source suggested. These include Facebook, Yahoo, Microsoft and Google, the source said. Facebook and Microsoft declined to comment. Yahoo and Google did not respond to requests for comment.
US-based telecommunications company Verizon could eye Opera, the source and the shareholder said. Verizon’s AoL was reported in July to be prepping a bid for mobile advertising business Millennial Media. It could shift its attentions to Opera Mediaworks, the source and shareholder speculated. Millennial Media and Opera Software are both strong players in the ad tech space. Verizon declined to comment.
One private equity firm was thought to have been approached regarding the sale of Opera earlier this year.
Opera declined to comment. Cheetah Mobile, Tencent and Baidu did not respond to requests for comment.
Alibaba declined to comment. A source close to Alibaba’s web search and browser company UCWeb said the company perceived Opera as for sale but would not comment on whether an approach would be made.