AI Startup Decart's $6 Billion Acquisition by Anthropic Collapses

The anticipated $6 billion acquisition of Israeli AI startup Decart by U.S. AI firm Anthropic has been called off after weeks of intense negotiations. Decart, founded by brothers Dean and Oryan Leiterdorf and Moshe Shilo, was in talks to be acquired by Anthropic, a deal that would have significantly boosted Israel's standing in the global AI landscape. The collapse of the deal is considered a moral blow to Decart's employees and a stain on the company's reputation.

Decart had reportedly also rejected a higher acquisition offer, estimated at over $7 billion, from another major AI player, Nvidia. Nvidia's recent $12.9 billion acquisition of Hugging Face, a platform for open-source AI models, may have signaled a strategic shift away from acquiring Decart. This leaves Decart with a shrinking pool of potential major acquirers capable of meeting its founders' and investors' expectations.

According to foreign media reports, Anthropic initiated the deal's termination late in the negotiation process, even after completing due diligence and signing a Letter of Intent (LOI). Potential reasons for Anthropic's withdrawal include dissatisfaction with Decart's technology, the possibility of developing similar technology internally, or acquiring comparable companies at a lower cost. Decart's business model has undergone several shifts, initially focusing on optimizing language models before moving into video and gaming AI, and later partially abandoning those areas.

Sources close to Decart believe Anthropic was impressed by the technology but insisted on relocating Decart's core operations and talent to San Francisco. The Leiterdorf brothers and Shilo reportedly refused this demand, preferring to keep the company based in Tel Aviv. This geographical stipulation, common among leading AI firms like OpenAI and Google, was a major point of contention.

Another possible factor in the deal's collapse could be Anthropic's impending Initial Public Offering (IPO), potentially valued at $2 trillion. The acquisition of Decart at $6 billion, which could have doubled to $12 billion post-IPO, might have been deemed too large a move before going public. Concerns about potential stock value depreciation after the IPO lock-up period expires may have also influenced the decision, with both parties possibly opting to wait and observe the market's reception of Anthropic's public offering before reconsidering the acquisition.

The cancellation is also a setback for Israel's AI sector, following another major deal involving AI firm AI21 Labs, which reportedly failed to secure a multi-billion dollar acquisition by Nuvios. This trend raises concerns about the future of significant AI acquisitions in Israel.