Browser maker Opera's board urges sale to Chinese collective for $1.2B

Bidders include security vendor Qihoo and mobile game maker Kunlun

opera browser logo

Opera Software's board today recommended that shareholders approve the $1.2 billion offer by a group of Chinese companies for the company, the result of a sales exploration since August.

The Norwegian company is best known to consumers as the maker of the Opera browser for personal computers, mobile phones and smartphones. Those parts of Opera Software, however, are minor contributors to the firm's bottom line, which is dependent on its mobile advertising platform.

"The Consortium's ownership will strengthen Opera's position to serve our users and partners with even greater innovation, and to accelerate our plans of expansion and growth," said Lars Boilesen, Opera's CEO, in a statement Wednesday.

The collection of Chinese companies that Boilesen dubbed the "Consortium" included Beijing Kunlun Tech, a mobile game maker, and Qihoo, known for its search and anti-malware business in the People's Republic. The bid was led by the private equity firm Golden Brick Silk Road Fund Management.

Opera kicked off the sales process in August 2015 when the board of directors said it had hired bankers to help explore options after the firm missed a second-quarter revenue forecast.

At the time, the board said the move was prompted by "strategic interest in the company from a number of parties," and so had "initiated a process to evaluate and consider strategic alternatives ... with the objective of further enhancing shareholder value."

"Consider strategic alternatives" is code for putting the "For Sale, Everything Must Go!" sign in the shop window.

Opera's share of the browser market is miniscule: In January, Net Applications estimated its global desktop user share at 1.6%, far behind the other browsers in the top 5, such as Internet Explorer (46.9%) and Chrome (35.1%). In its latest earnings presentation, Opera said its desktop browser had just 59 million monthly average users (MAU) during the December quarter. Meanwhile, Opera for Android boasted a MAU of 144 million.

Qihoo has a browser of its own, which accounted for about 3.5% of the Chinese market, according to data from Baidu, the largest search provider in the People's Republic of China.

But browsers have long been a trickle in Opera's revenue stream. In the latest quarter, the firm's desktop and mobile browsers brought in $23 million, or less than 12% of the December quarter's total of $194 million. Like other browser makers, notably Mozilla, Opera earns the bulk of its browser-based revenue from deals with search providers. In Opera Software's case, those deals were with Google and Russia's Yandex.

Opera's big dog was its mobile advertising business, with revenue last quarter of $145 million, or 75% of the total.

The potential buyers made note of that in their Wednesday statement. "Opera has made remarkable achievements in recent years in the fields of mobile browser and mobile advertising," said Yahui Zhou, CEO of Kunlun, speaking for the bidding consortium.

Opera's sale awaits shareholder approval, which will be solicited in the first half of March. Although approval will require a "Yea" vote by those holding at least 90% of the outstanding shares, a group of major shareholders representing 33% of the shares has already said it would accept the deal.

Copyright © 2016 IDG Communications, Inc.

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