CommTouch Boosts Number of Shares for IPO

CommTouch Software, which delayed its public offering twice over the past two weeks, said it now plans to sell a bigger chunk of the company and boost its value to more than $230 million.

The developer of free e-mail systems, with offices in Ein Vered, Israel, and Santa Clara, Calif., amended its prospectus on Friday with the U.S. Securities and Exchange Commission to increase the number of outstanding shares by 1.3 million and sell one-third of them instead of one-quarter.

The move, reflecting a $20-million investment promised last week by two firms connected to software billionaire Paul Allen, required another 48-hour delay after an expected stock sale on Friday was canceled. Now the offering may be made today, with shares likely to begin selling at $15 to $17 on Tuesday, bankers said.

The involvement of Allen, who helped Bill Gates found Microsoft Corp. and last month ranked third on the Forbes magazine list of the world’s wealthiest working people, could increase interest in the stock sale and in CommTouch, until now an obscure software developer that started in an Israeli chicken coop.

With the $20-million investment from Allen’s Vulcan Ventures Inc. and Go2Net Inc., which is contingent on the public sale moving forward, the company will be selling one-third of its 13.6 million shares to raise about $72 million. Consequently CommTouch, which reported a $4.4-million loss last year on $389,000 in sales, may be valued at as much as $231 million.

The money will be used to expand sales and marketing and build its presence in international markets, according to the amended prospectus. The added shares will be split one-third for Vulcan and two-thirds for Go2Net, an Internet content company part-owned by Allen.