IAC Proposes to Buy Angie's List for $8.75 a Share in Cashby and
Owner of rival HomeAdvisor is also open to a stock deal
Offer is 10 percent premium to Angie's closing price Wednesday
IAC/InterActiveCorp offered to buy Angie’s List Inc. for $8.75 a share in a cash deal, seeking to add the consumer-review website to its stable of online businesses, including Angie’s List rival HomeAdvisor.
IAC’s offer, a deal rebuffed last month by the Angie’s List board, represents a 10 percent premium to Angie’s List’s closing price Wednesday of $7.92. The bid values Angie’s List at about $512 million based on the company’s outstanding shares, according to data compiled by Bloomberg. IAC would also consider a stock-for-stock exchange deal that would combine HomeAdvisor with the local-business review and listings site, according to a statement Wednesday from New York-based IAC.
Angie’s List charges consumers for access to reviews and also sells advertising to contractors and other companies. Its business model is under attack from competitors such as Amazon.com Inc. and Seattle startup Pro.com, which are positioning themselves as middlemen between homeowners and contractors who clean gutters, paint and provide other improvements. That marketplace model takes a cut of each transaction.
In a separate statement, Indianapolis-based Angie’s List confirmed it received the unsolicited offer, and said it will review and evaluate the proposal. Bank of America Corp.’s Merrill Lynch unit and law firm Sidley Austin LLP are acting as advisers, Angie’s List said.
TCS Capital Management, which owns about 9.6 percent of Angie’s List, according to filings, wrote a letter last month urging the company to put itself up for sale, specifically pointing out the value of a combination with HomeAdvisor. The activist shareholder recommended an all-stock transaction with HomeAdvisor that could be structured in a tax-free manner. Patience with Angie’s List has been “running thin,” Eric Semler, president of TCS Capital Management’s president, wrote at the time.
“With competition intensifying in the home-services industry, it no longer makes sense for Angie’s List to remain a stand-alone company,” he wrote. “We believe that the greatest long-term shareholder value can be achieved through a strategic combination with another industry player such as HomeAdvisor.”
HomeAdvisor matches consumers with home services professionals in the U.S., France and the Netherlands. It makes money by selling subscription services to the professionals looking for exposure to consumers on its marketplace. IAC also owns dating websites such as Match.com and media sites such as the Daily Beast.
IAC Chief Executive Officer Joey Levin said in the statement that the board at Angie’s List isn’t interested in engaging about the transaction, although he again pressed the case for the deal’s “compelling strategic rationale” in a letter to the board dated Wednesday. Angie’s List executives met with IAC on Oct. 23, Levin said in the letter.