Israel-based user engagement firm Conduit is merging its browser-tool division with Smilebox and IncrediMail creator Perion Network, which is headquartered in Redmond, Wash. but started in Israel. The combined search distribution entity will bear the Perion name, have a market cap of between $800 million and $900 million, and provide a public listing for Conduit through Perion.

The merged company will have over 260,000 publisher and content partners, generating over a third of a billion dollars in annual revenue.

Perion CEO Josef Mandelbaum said in a statement that “this is truly a case where one plus one equals three,” in that the businesses complement each other and will be able to use their combined resources to boost their efforts in their monetization and distribution platform, mobile, display ads and new products. Mandelbaum will remain the CEO, and Josh Wine, who has led Conduit’s browser tool division (Client Connect), will continue in that role and will also become President of Perion.

Up to 60 million shares

Perion will issue between 57 million and 60 million shares to Conduit, so that Conduit shareholder and option holders will own 81 percent of Perion.

Perion’s products include IncrediMail, a free mail program designed for sending personalized, creative messages; PhotoJoy, for turning photos into 3D screensavers, desktop wallpaper collages or toy-like widgets; the Smilebox media sharing service; and an expressive IM service, SweetIM.

Conduit has been focused on user engagement, through a Community Toolbar that connects users to fresh content, the Conduit Mobile app- and mobile website-making platform, the Wibiya custom messaging bar for websites, the QuickLaunch branded Lock Screen, and the U browser that “blends your apps, music, and friends into one online experience.”

Conduit said it will now focus on its U browser, QuickLaunch, Wibiya and Conduit Mobile, which are still in start-up mode. In July, Conduit confirmed to news media that it was intending to split off some of its products to maximize their value. By allowing its Client Connect division to become publicly traded, some of its investors could reap their rewards by selling off shares from the combined company.