Google will fork out $1.3 billion to buy the Israeli-based Waze social-friendly navigation app, the Hebrew-language Globes business newspaper reported Sunday. Waze’s staff reportedly will remain in Raanana.
Facebook reportedly was in front of the lineup to buy Waze, but Waze rejected the condition that its staff be transferred to the United States. Waze may also have been holding out for more money, and Google came up with the right price.
Apple had been rumored to be a potential bidder, but Apple CEO Tim Cook denied those reports.
Waze has soared in popularity, with more than 50 million users around the world, and that number is growing every day.
Google has shown that it loves Israel. In 2010, it bought up website gadget developer LabPixies for $25 million and interactive video-clip developer QuikSee for $10 million, and has set up a Google office here. Facebook, on the other hand, has closed down the Israeli operations of most of the companies it bought up.
The Waze app allows drivers using smartphone and tablet to share information on driving times and traffic situations, as well as the location of police radar traps, accidents and hazardous conditions. Based on user-shared information, it helps users find the fastest path to their destination taking into account traffic conditions and preferred routes.
The $1.3 billion price tag is more than 40 times the $30 million of financing Waze received less than year ago, three years after it was founded. Waze’s founders will be instant multi-millionaires thanks to the Google purchase, which has not been officially confirmed.
But no one has denied the purchase eitehr. Waze told Globes “no comment,” and Google said, “We don’t relate to rumors and speculation.”
The influx of another $1.3 billion into Israel is great news for the Finance Ministry and for anyone purchasing items whose prices are based on the dollar. It is terrible news for exporters and for Israelis whose salaries come from the United States.
The influx of dollars will put downward pressure on the shekel-dollar rate, which dropped last week to 3.61 shekels to the dollar.
Last month. Warren Buffet paid out $2 billion to buy the remaining shares of the Iscar precision tool maker, and PepsiCo and Coca Cola are now rumored to be offering approximately $2 billion for the Israeli SodaStream manufacturer of machines that convert tap water into soda, and which had become an international hit.
The influx of those big bucks, along with the prospects of Israel’s exporting gas and bringing in more foreign currency, has strengthened the shekel. It also is a major headache for corporations and wage earners whose profits and salaries are in dollars and then converted to shekels.
Bank of Israel Governor Stanley Fischer has tried to battle the drop in the shekel-dollar rate by cutting the interest rate by a quarter of a percent, twice in two weeks, and announcing a $2 billion buying binge of dollars. So far, the “Fischer effect” has been negligible and the rate has continued to drop.
Following the report of the Google purchase of Waze, the exchange rate may drop again Monday when currency trading resumes, unless Fischer buys more dollars – lots of them.