Internet Gold (NASDAQ: IGLD) today announced that it expects to complete an acquisition of the remaining shares of GoldTrade, a company in which it currently owns a 48.3% share, during the first quarter of 2005. GoldTrade operates P1000, a popular and successful Israeli e-commerce site. After completing the acquisition, Internet Gold plans to merge P1000 into its operations as an independent division focused on e-commerce. The acquisition will be immediately accretive to the Company’s revenues and operating profits.
The terms of the transaction have been approved by the Boards of Directors of both Internet Gold and GoldTrade, and will be presented for approval by Internet Gold’s shareholders at a meeting to be held at the end of December 2004. Immediately following the acquisition, Internet Gold will begin consolidating P1000’s results into its financial reports. Currently, as a minority shareholder, Internet Gold reports its interest in GoldTrade’s results on an equity basis.
P1000, GoldTrade’s only business activity, is a popular Hebrew e-commerce/auction site used by stores, importers and other suppliers to sell branded consumer goods to the public. According to a study conducted by TIM in June 2004, P1000 has achieved a market share of 16.5%, making it Israel’s No.3 e-commerce/auction site. The portal’s revenues consist primarily of a 6% to 9% fee charged for each completed sale.
“P1000 is an important part of our plan to establish a leadership position in Israel’s rapidly-growing e-commerce market,” said Mr. Eli Holtzman, Internet Gold’s CEO. “We are big believers in e-commerce, and are confident that Internet purchases will become steadily more important to Israeli households in the years to come. Even today, P1000 is already reached positive EBITDA, and we believe its entry into the Group will allow it to become more efficient. At the same time, we believe the synergies between P1000 and our other divisions, including our portals MSN-Israel and Start.co.il, together its access to the large Internet Gold subscriber base, will help P1000 become a leading player in this exciting market.”