Home Services Marketplace Angie’s List Rejects IAC’s $512M Acquisition Offer

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Properly, it seems prefer it could be some time but earlier than you swipe proper to seek out your subsequent bricklayer or painter. Angie’s List, a market for unbiased contractors, has formally rejected a suggestion from IAC, proprietor of Tinder, to purchase the enterprise for $ 512 million. The supply, initially made earlier this month, was for IAC to purchase the corporate at $ 8.75 per share. Angie’s List trades on the NASDAQ trade.

“We proceed to consider that there’s vital worth embedded within the Firm and that it’s untimely to conclude right now that a strategic transaction is within the best pursuits of Angie’s List shareholders,” wrote Angie’s List CEO Scott Durchslag to IAC in a letter revealed by his firm. “We recognize your curiosity in Angie’s List and your recognition of our market-main platform.”

The event comes as IAC is in the midst of a unique M&A course of: its subsidiary Match Group — together with courting app Tinder, which helps you to swipe left and proper to reject or settle for potential matches — has filed to go public.

This was the second strategy made by IAC for Angie’s List, which is each a market and consumer-generated native listings and evaluations website. It offers a platform for builders, exterminators, cleaners, healthcare assistants, and different providers contractors to attach up with native individuals who need to rent them for jobs; and it’s a website for individuals to seek out and fee these contractors. This was IAC’s second strategy to the corporate, with the primary supply in October at $ 8.50 per share, so maybe the corporate will come again a 3rd time fortunate with a better supply.

Angie’s List went public in 2011, however since then its share price has fallen from its opening price of $ 15.80. That is due partially to the corporate facing competitors from bigger companies like Amazon in addition to a number of quicker-shifting, privately funded startups like Thumbtack providing options.

One more reason is that the margins on market enterprise fashions are skinny. It means Angie’s List wants scale to have robust returns, however the price of enlargement weighs on the enterprise, and it has misplaced cash yearly since going public.

Its CEO Scott Durchslag joined the corporate in September after longtime CEO Invoice Oesterle stated he was stepping right down to pursue political workplace. Durchslag got here from Greatest Purchase.

IAC presumably believes that it has a big sufficient portfolio of different Web manufacturers — it owns some one hundred fifty together with some with Angie’s List synergies like HomeAdvisor — that it might leverage to develop the Angie’s List network. It will additionally give IAC a further income stream past its mainstay of promoting.

Angie’s List’s share price has dropped right down to $ 9.35 per share — maybe because of this most up-to-date news — besides, that’s nonetheless larger than IAC’s supply. The corporate’s present market cap is $ 573 million.

The complete textual content of the letter from Angie’s List to IAC CEO Joey Levin is under:

Pricey Joey:

The Angie’s List Board of Administrators, with the help of its unbiased monetary and authorized advisors, has thought-about your November 11, 2015 letter proposing to accumulate Angie’s List for $ 8.75 per share in money. Based mostly upon a radical evaluation, the Board has unanimously reaffirmed the conclusion it reached and I communicated to you relating to IAC’s October 23, 2015 proposal to accumulate Angie’s List for $ 8.50 per share. This adopted your preliminary October 5 letter, if you first approached me relating to a possible mixture.

We proceed to consider that there’s vital worth embedded within the Firm and that it’s untimely to conclude presently that a strategic transaction is within the best pursuits of Angie’s List shareholders. We respect your curiosity in Angie’s List and your recognition of our market-main platform.

As you’re conscious, I used to be appointed because the new President and Chief Government Officer of Angie’s List in September. As introduced on the third quarter earnings name, we’re creating a new Worthwhile Progress Plan for the Firm. Whereas we anticipate to offer the small print of this plan subsequent quarter at our Investor Day, we’re already starting to execute some parts of it.

Along with our new Angie’s Truthful Worth Assure and Angie’s Service High quality Assure introduced final month, we launched LeadFeed final week, a new product designed to seize demand from free online guests and switch that demand into leads for service suppliers. We have now recognized $ 10 million in value reductions, redesigned the gross sales drive, baselined Internet Promoter Scores, modified media businesses, shifted advert spend towards digital channels, and commenced scaling our new Angie’s List 4.0 platform nationally.

In reference to our third quarter outcomes, we reported improved efficiencies, together with in promoting and advertising bills, along with elevated quarter over quarter revenues, that led to increasing margins within the third quarter. The elevated income displays improved yr on yr service supplier metrics, together with will increase in contract worth, backlog, complete members, first yr member retention, net visitors, mobile net visitors and shopper and repair supplier participation in e-commerce. Moreover, we turned across the second quarter’s sequential decline in collaborating service suppliers. The 2015 third quarter was the primary worthwhile third quarter within the Firm’s historical past.

The constructive outcomes we’re seeing give us confidence within the course we’re heading. The market additionally seems to share our enthusiasm because the Firm’s inventory price elevated 11% on the day we introduced our third quarter outcomes and previewed parts of this Worthwhile Progress Plan, and has elevated 27% from that day by means of market shut on November 11, previous to when IAC publicly introduced its proposal1.

As I defined to you on our phone name on November 3, the Board thought-about your October 23 proposal and concluded that it ought to have the chance to completely consider our Worthwhile Progress Plan and will share that plan with shareholders earlier than reaching a choice as as to if to interact in a transaction with IAC or another get together. However, IAC publicly introduced its unsolicited $ 8.75 per share money proposal solely eight days later. Notably, this “elevated” proposal represented solely a 10% premium on the time it was made and dramatically undervalues the Firm. We subsequently consider it isn’t a compelling cause to shift our focus to IAC and derail the turnaround work we have now underway, notably given the lengthy-time period worth creation potential of our plan. Whereas such shift could also be good for IAC shareholders, we don’t consider it’s within the best curiosity of Angie’s List shareholders.

The Board of Administrators and administration of Angie’s List are dedicated to enhancing shareholder worth, and our pursuits are aligned with all Angie’s List shareholders’ as collectively we personal greater than 20% of the Firm’s excellent shares. The Board doesn’t consider it’s within the best curiosity of Angie’s List shareholders to hurry to judgment and that doing so can be opposite to our fiduciary duties. If the strategic logic underpinning your proposal is sound, it is going to nonetheless be sound subsequent quarter when our Worthwhile Progress Plan is introduced. As soon as our Worthwhile Progress Plan is accomplished and our shareholders knowledgeable, we’ll in fact contemplate any worth enhancing various to the plan, together with a transaction with IAC or different third events.

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Source : TechCrunch