Ancestry.com Inc., the family-history research website, is weighing a sale and working with Frank Quattrone’s Qatalyst Partners LLC to find buyers, according to a person with knowledge of the situation. The shares surged 11 percent today.
The Provo, Utah-based company probably will attract interest from private-equity firms, said the person, who declined to be identified because the process is private. Ancestry.com has a market capitalization of about $1.1 billion based on today’s closing share price.
Social-network providers, such as Google Inc. and Facebook Inc., may see value in adding a family-centric service, said Susan Etlinger, an analyst at San Mateo, California-based Altimeter Group. The Internet giants typically acquire companies specializing in emerging markets, and whether a company is currently profitable is less important, she said.
“Ancestry has to prove that there’s enough growth potential,” Etlinger said. “This hasn’t been a market that has been particularly hot.”
Heather Erickson, a spokeswoman for Ancestry.com, declined to comment. Sally Palmer, a spokeswoman for Qatalyst, didn’t respond to an e-mail and phone call seeking comment.
The stock closed at $25.06 today in New York. This week, Bank of America Corp. analysts Justin Post and Nat Schindler identified Ancestry.com as one of their top four Internet stock picks for a bad economy.
The company’s subscriber base generates more stable revenue than its peers and is “attractively priced,” the analysts said in a report dated June 4. Ancestry.com was valued as low as 14.7 times (ACOM) earnings last month, the cheapest level on record, according to data compiled by Bloomberg that dates back to June 2010. A $100 million initial public offering in November 2009 valued the company at 33.8 times full-year profit, the data show.
There have been more than 650 e-commerce services takeovers worldwide over the past decade, according to data compiled by Bloomberg. The median that buyers paid, based on 15 deals over that period, was about 35 times earnings, the data show.
Ancestry.com was founded in 1983 as a publishing company and digitized its content in 1996, according to its website. The site calls itself the world’s largest online family-history resource.
Subscribers to Ancestry.com rose 16 percent in the first quarter to 1.87 million, according to a statement on April 25. Net income rose 51 percent in the three months ended March 31 as revenue surged 19 percent to $108.5 million.
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