Oslo: Opera Software ASA would cost Facebook Inc. over $1 billion (around Rs.5,560 crore today) as competition from Google Inc. and others could push up the price tag, analysts said, as takeover talk boosted the share price by up to 26% on Tuesday.
Oslo-listed Opera, coveted for its advanced mobile phone software technology, would be a perfect fit for Facebook, but the firm’s business is also vital for some of the industry’s biggest players, so any bid is likely to attract others to the table.
“Opera would be sensible for Facebook on several levels,” Arctic Securities said. “It would enhance the now limited mobile experience of Facebook, improve Facebook’s mobile monetization problem, help Facebook retain online game developers leaving the social network over the lack of a mobile platform and further improve Facebook’s ability to target ads.”
Opera makes various Web browsers that work across an array of platforms including mobile phones, tablets, personal computers and TVs. The software is available on most phones and works on various operating systems, giving it the reach that Facebook is seeking.
The browser can compress data by as much as 90%, saving consumers on data charges, and has the technology to better display ads, a key factor for Facebook which has struggled to convert its rapidly rising traffic from mobile platforms to revenue.
Opera, which has about 200 million Mobile and Mini subscribers, has also built a significant market share in key emerging markets, such as India and Brazil, where Facebook has been generally weak. It would be such a perfect fit for Facebook, analysts said, that it would have to pay a hefty premium.
DNB, Norway’s top bank, said the price would have to be double Friday’s closing level, or 68.6 crowns, valuing the firm at $1.35 billion, while Danske Bank and ABG Sundal Collier both predicted a price between 50 and 60 crowns a share, or between $1 billion and $1.2 billion.
Opera officials have repeatedly declined to comment.
However, chief executive Lars Boilesen last October said he would “love to” further cooperate with Facebook. “We are already Facebook’s platform of distribution in emerging markets such as Africa and India. A big part of the Opera Mini traffic is from Facebook. So we are already their channel in these markets,” he said in October.
Still, several obstacles remain. Opera founder and top shareholder Jon S. von Tetzchner said the firm should focus on organic growth. “I want Opera to focus on growth and delivering good results; there are big opportunities for Opera,” Tetzchner, who holds 10.9% of Opera told Reuters. He said he was not aware of a bid and had not decided how he would react to one, but added it would be “undemocratic” for him to try to block it if others supported it.
Another obstacle could be Google, which has extensive relationships with Opera. “A takeover by Facebook will likely send cold water down Google’s spine,” Arctic Securities said.