Mobile social and video applications developer Vringo Inc. (AMEX: VRNG ) has signed a letter of intent to acquire mobile messaging company Zlango Ltd. for $5 million in shares, and also announced a $2.5 million investment by Benchmark Capital and DAG Ventures.
Vringo and Zlango will combine Zlango’s media messaging services Vringo’s mobile social and video applications to create a new leader in the mobile social arena.
Vringo will issue 3 million shares to Zlango and issue 250,000 options for 250,000 shares to Zlango's executives. Vringo closed at $1.53 on the American Stock Exchange yesterday, giving a market cap of $8.7 million. Vringo's share price has fallen two-thirds since its IPO a year ago.
Vringo posted a net loss of $1.1 million on $147,000 revenue in the first quarter of 2011, after losing $9.9 million on $211,000 revenue in 2010.
Zlango has raised $22 million to date from Benchmark, DAG Ventures, Accel Partners, and other investors. It raised $6 million in its latest financing round three weeks ago. The company's turnover is a few million dollars a year.
Vringo CEO Jon Medved said, "This is a great opportunity for us, because Zlango operates in a larger market than we do - a market with a turnover of billions of dollars a year."
Zlango CEO Ronny Haim said, "Both companies distribute applications platforms and can immediately sell the other company's product to deepen market penetration."
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