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Ancestry.com Jumps as Much as 20% on Buyout-Talks Report

Ancestry.com Inc. (ACOM), the family- history research website in talks to sell itself, reported second-quarter sales and profit that topped analysts’ estimates, citing user gains and demand for new products.

Revenue rose 18 percent to $119.1 million, topping $117.4 million, the average of analysts’ estimates compiled by Bloomberg. Per-share profit also rose to 44 cents, topping the 41 cents projected by analysts. The company also raised its sales forecast for 2012 to $473 million to $480 million.

Provo, Utah-based Ancestry.com passed the 2 million-user milestone and boosted sales by giving access to more information, including on DNA and U.S. census figures. The company is discussing a possible buyout with private-equity firm Providence Equity Partners Inc., according to a person with knowledge of the matter.

With stable revenue and relatively lower valuation, Ancestry.com was “attractively priced,” Bank of America Corp. analysts said last month in a research report. The New York Times reported yesterday that the company is in talks with Providence and other companies to be taken private. It could be valued at more than $1.5 billion, the newspaper reported.

Ancestry.com rose to as high as $32.80 in late trading after the results were released. It had surged 15 percent to $31.42 at today’s close, the biggest increase since Jan. 5.

Besides Providence, Ancestry.com is in talks with TPG Capital LP, and Permira, the Times said. Final bids are due early next month, according to the report. Ancestry.com has been working with Frank Quattrone’s Qatalyst Partners LLC to find buyers, Bloomberg News reported last month.

2013 ‘Headwinds’

Ancestry.com Chief Executive Officer Tim Sullivan declined to comment when asked on a conference call about the prospect of a sale.

Owen Blicksilver, a spokesman for TPG, Nathaniel Garnick, a spokesman for Permira, and Andrew Cole, a spokesman for Providence, declined to comment.

The company lost almost a third of its market value earlier this year amid concern that the cancellation of a television show featuring its genealogy research would crimp subscriber growth. “Who Do You Think You Are?” showed celebrities such as Martin Sheen and Marisa Tomei exploring their roots with the help of Ancestry.com research and gave the service more exposure. The final episode aired on May 18 on Comcast Corp. (CMCSA)’s NBC network.

The final season of the NBC show accounted for 5 percent to 7 percent of Ancestry.com’s global marketing budget, Chief Financial Officer Howard Hochhauser said on the call. While Ancestry.com is looking to do similar TV deals, not having the show to attract subscribers “will certainly be a headwind in 2013,” Hochhauser said.

“Our long-term would be to continue to invest in television programs that celebrate family history,” Sullivan said. “None of it is must-have marketing. I think we would just be very careful, we would just be very disciplined in evaluating possible opportunities.”

Ancestry.com was founded in 1983 as a publisher of genealogical books and magazines, and later digitized its content.

To contact the reporters on this story: Mark Milian in San Francisco at mmilian@bloomberg.net; Devin Banerjee in New York at dbanerjee2@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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