Perion Acquires Undertone

Positioning Perion as a Leader in High-Quality Advertising Solutions for Brands and Publishers

Perion Network Ltd. (NASDAQ: PERI) (the “Company”) announced today that it has acquired Undertone, a leader in high-impact, cross-screen advertising solutions, for $180 million in total enterprise value. The acquisition will be immediately accretive and continues the strategic evolution of Perion into a global technology company delivering high-quality advertising solutions to brands and publishers.

Strategic Benefits of the Acquisition

• Creates a differentiated independent ad tech platform with significant scale and profitability
• Adds noteworthy relationships with premium brands, agencies and publishers
• Enhances mobile footprint and extends programmatic capabilities
• Broadens product suite with the addition of proprietary, high-impact creative formats
• Substantially diversifies revenue base

“We are very excited about this acquisition,” said Perion CEO Josef Mandelbaum. “In Undertone we have found a premium brand company of scale and profitability, with a differentiated sustainable position in the market. Together we firmly establish ourselves as the leader in delivering high-quality advertising solutions for publishers and brands. In addition to providing strong cash flow and revenue diversification, Undertone will add significant depth and talent to our company. With this acquisition we intend to become synonymous with engaging and impactful advertising solutions for brands and publishers.”

“We are thrilled to be joining Perion,” said Corey Ferengul, CEO of Undertone. “I am excited that Undertone’s success with high-impact formats and great relationships with brands and agencies have brought us to this point in the company’s evolution. It’s a credit to all of the hard work of our team. It’s not often you find two companies as complementary as Undertone and Perion. We share the vision as to the industry’s need for a strong offering, focused on quality. I believe the combination of our companies will result in a broad offering of unique capability for brands and agencies to reach consumers and for publishers to monetize their content.”

Undertone Financial Highlights and Outlookevenues for the first nine months of 2015 were $104.0 million

• 75% of revenues come from high-impact cross-screen and mobile
• Adjusted EBITDA for the first nine months of 2015 was $14.6 million
• Revenues for 2015 are expected to be in the range of $143 – $145 million
• Adjusted EBITDA for 2015 is expected to be in the range of $21 – $23 million

¹ Unaudited, as provided by Undertone

Financial Details on the Transaction

The all-cash acquisition will be financed at closing with approximately $91 million of cash from Perion, an additional $16 million as a holdback, payable in 18 months, $3 million payable in installments over the next 18 months and another $20 million, bearing interest, due in 2020. In addition, the Company has entered into a new long-term credit agreement with the existing Undertone lenders, SunTrust Robinson Humphreys, Silicon Valley Bank and Comerica Bank, for $50 million.

JMP Securities LLC served as exclusive financial advisor and debt placement agent to Perion. Goldfarb Seligman & Co. LLP served as legal advisor to Perion, and Kramer Levin LLP provided US legal advice. Morgan Stanley & Co. LLC served as exclusive financial advisor to Undertone, and Goodwin Proctor LLP acted as Undertone’s legal counsel.

LionTree Advisors served as a capital markets advisor to Perion.

Conference Call

Perion will host a conference call to discuss the results today, December 1, 2015, at 11:30 a.m. ET. Details are as follows:

• Conference ID: 845795
• Dial-in number from within the United States: 1-888-329-8877
• Dial-in number from Israel: 1-809-245-906
• Dial-in number (other international): 1-719-325-2429
• Playback available until December 8, 2015 by calling 1-877-870-5176 (United States) or 1-858-384-5517 (international). Please use PIN code 845795 for the replay.
• Live webcast and presentation accessible at https://www.perion.com/ir-events/