Angie's List Said to Put Off Deals Until After CEO Plan

  • CEO Durchslag's plan expected in first quarter of next year
  • Angie's List pares early losses, shares close up 1.3 percent

Angie’s List Inc. shareholders and board need to review new Chief Executive Officer Scott Durchslag’s turnaround plan in the first quarter of next year before considering deals, according to people familiar with the matter.

The company, whose board rejected an unsolicited proposal from IAC/InterActiveCorp Tuesday, will be in a better position to evaluate next steps at that time, whether that means remaining independent or doing any transactions, the people said.

After reviewing IAC’s latest proposal of $8.75 a share in cash, the Angie’s List board “determined that it is premature to conclude that a strategic transaction is in the best interests of Angie’s List shareholders,” and said that the offer “dramatically undervalues the company,” according to a statement Tuesday from the Indianapolis-based company.

This was the second approach by IAC. The media and Internet company led by Barry Diller, which owns popular online-dating sites Tinder, OkCupid and Match as well as HomeAdvisor and Dictionary.com, increased its bid last week after the Angie’s List board rejected an earlier offer of $8.50 a share. IAC proposed $8.75 a share in cash, a 10 percent premium to Angie’s List at the time, valuing the company at about $512 million and sending shares soaring to a one-year high.

Angie’s List closed up 1.3 percent at $9.96 in New York Tuesday, after earlier dropping as much as 7.9 percent. The shares have climbed 60 percent this year. IAC fell 3.4 percent to $62.51.

‘Higher Bid’

Blake Harper, an analyst at Topeka Capital Markets Inc., said Angie’s List likely wants more time to prove itself so it can negotiate with a stronger hand in the future.

“It’s definitely the right move for them,” said Harper, who rates the stock a hold. “They are probably just angling for a higher bid down the road.”

IAC would have to offer at least $10 a share before Angie’s List would seriously consider selling its business, he said. 

Harper said he doubts shareholders like TCS Capital Management, which owns about 9.6 percent of Angie’s List, are selling on Tuesday’s news. TCS wrote a letter last month urging the company to put itself up for sale, specifically pointing out the value of a combination with HomeAdvisor.

“They want a higher bid,” he said. “The stock is down, but it’s still at a premium to the deal price, so I don’t think investors are saying the deal is falling apart.”

IAC didn’t respond to a request for comment.

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