SCHEDULE: Major Shareholders Demand Extraordinary Meeting to Challenge Perion Network's 'Poison Pill' Defense

Two significant shareholders, Phoenix Insurance Company Ltd. and Value Base Fund Limited Partnership, collectively holding 11.48% of Perion Network Ltd., have formally demanded an extraordinary shareholders meeting to cancel the company's recently adopted rights plan and amend its Articles of Association to require shareholder approval for future such plans.

Summary

• Phoenix Insurance Company Ltd., holding 5.71% of the company's share capital, and Value Base Fund Limited Partnership, holding 5.77%, have jointly requested an extraordinary meeting of Perion Network Ltd. shareholders, representing a collective 11.48% of voting rights.
• The primary objective of the meeting is to amend the company's Articles of Association to empower the general meeting of shareholders to cancel a rights plan by a simple majority and to mandate that any future rights plan adopted by the Board of Directors requires simple majority shareholder approval to become effective.
• Subject to the approval of the proposed amendment to the Articles of Association, the shareholders also seek to cancel the company's rights plan that was adopted on April 3, 2025.
• The demanding shareholders insist that the company must convene this meeting immediately and without delay, asserting that the company has already exhausted a 21-day waiting period through various maneuvers.
• The shareholders express severe disapproval of the Board of Directors' conduct, particularly regarding the adoption of the rights plan, which they believe disregards severe damages to shareholders, including the potential delisting of the company's shares from the Tel Aviv Stock Exchange if the plan is activated.
• Allegations include a severe breach of the company's reporting obligations related to the rights plan and serious violations of the law concerning corporate actions taken after preliminary approval from the Israeli Securities Authority in June 2024.
• Value Base Fund Limited Partnership (VBF LP) beneficially owns 2,596,831 Ordinary Shares, representing approximately 5.77% of the 45,037,180 Ordinary Shares outstanding as of March 5, 2025.
• Phoenix Financial Ltd., the parent company of Phoenix Insurance Company Ltd., beneficially owns 2,574,926.52 Ordinary Shares, representing approximately 5.72% of the outstanding shares.
• VBF GP, on behalf of VBF LP, sold 35,958 Ordinary Shares on May 22, 2025, at a price of $11.02 per share on Nasdaq.

Sentiment

Score: 3

Explanation: The document indicates significant shareholder dissatisfaction and a direct challenge to the company's board and its corporate governance decisions, specifically regarding a rights plan. Allegations of severe damages, reporting breaches, and legal violations suggest a negative outlook for current management and potential for ongoing internal conflict, which is generally unfavorable for investors.

Positives

• Significant institutional shareholders are actively exercising their rights to influence corporate governance, potentially leading to improved accountability.
• The proposed amendments aim to enhance shareholder democracy by requiring shareholder approval for future rights plans and allowing for the cancellation of existing ones by a simple majority.

Negatives

• The company's Board of Directors is facing a direct challenge from major shareholders, indicating internal conflict and dissatisfaction with current governance.
• The adopted rights plan is viewed by shareholders as potentially causing 'severe damages,' including the risk of delisting from the Tel Aviv Stock Exchange.
• Allegations of 'severe breach of the Company's reporting obligations' and 'serious violation of the law' raise concerns about the company's compliance and transparency.
• The company is accused of using 'various maneuvers' to delay the convening of a shareholders meeting, suggesting a lack of responsiveness to shareholder demands.

Risks

• Potential delisting of the company's shares from trading on the Tel Aviv Stock Exchange if the rights plan is activated.
• Legal and regulatory risks stemming from alleged severe breaches of reporting obligations and serious violations of the law.
• Ongoing shareholder activism and potential for prolonged disputes with significant investors could create uncertainty and impact company operations and valuation.

Future Outlook

The demanding shareholders expect the company to convene an extraordinary shareholders meeting immediately to vote on amending the Articles of Association to allow shareholder cancellation of rights plans and require future rights plans to be shareholder-approved, and to specifically cancel the rights plan adopted on April 3, 2025.

Industry Context

This filing highlights a growing trend of shareholder activism, where institutional investors leverage their stakes to influence corporate governance and strategic decisions, particularly concerning defensive measures like 'poison pills.' Such actions often arise when shareholders perceive management or the board as acting against their best interests, aiming to enhance transparency and accountability within publicly traded companies.

Corporate Governance

Legal Proceedings

• The demanding shareholders assert claims regarding a 'severe breach of the Company's reporting obligations' in connection with the rights plan.
• The demanding shareholders assert claims regarding 'corporate actions taken by the Company following the approval of its preliminary approach to the Israeli Securities Authority in June 2024, while in serious violation of the law.'

Stakeholder Impact

• Shareholders: Potential for increased influence over corporate governance and strategic decisions, particularly regarding anti-takeover measures. Risk of share price volatility due to ongoing shareholder dispute. Potential for delisting from TASE if rights plan is activated and not cancelled.
• Board of Directors/Management: Faces significant challenge to its authority and decisions, potentially leading to loss of control over strategic direction or even changes in board composition.
• Regulators (SEC, Israeli Securities Authority): May face increased scrutiny due to allegations of reporting breaches and legal violations.

Next Steps

• Perion Network Ltd. is required to convene an extraordinary shareholders meeting.
• Shareholders will vote on amending the company's Articles of Association to allow cancellation of rights plans by simple majority and require future rights plans to be shareholder-approved.
• Shareholders will vote on the cancellation of the company's rights plan dated April 3, 2025.

Key Dates

Recommendation

Keywords

Perion Network Ltd., Shareholder Activism, Corporate Governance, Rights Plan, Poison Pill, Extraordinary Meeting, SEC Filing, Schedule 13D, Phoenix Insurance Company Ltd., Value Base Fund Limited Partnership, Tel Aviv Stock Exchange, Board of Directors, Shareholder Rights