Neither Facebook nor Google Is Buying Ancestry.com

Maybe it's time for Who Do You Think You Are? to be renamed How I Met Your Parents.

Shares of Ancestry.com (Nasdaq: ACOM  ) soared 11% yesterday on reports that the leading genealogy website operator is about to put itself up for sale.

A source "with knowledge of the situation" is telling Bloomberg that the company is working with Frank Quattrone's Qatalyst Partners to weigh the matter and smoke out a buyer if it decides to go in that direction.

The speculative buzz comes nearly a month after the stock got crushed when Comcast's (Nasdaq: CMCSK  ) (Nasdaq: CMCSA  ) NBC Universal revealed that it will not be renewing Who Do You Think You Are? -- the primetime genealogy series that finds Ancestry.com helping celebrities dive deep into the roots of their family trees -- for a fourth season.

Bloomberg's source indicates that the buyer will likely come from the ranks of hungry private-equity firms, and that seems about right.

An analyst in the story offers up that Google (Nasdaq: GOOG  ) and Facebook (Nasdaq: FB  ) would also be logical suitors, but neither party makes sense.

For starters, Facebook can't be interested in Ancestry.com because it's very profitable and generates gobs of revenue. Yes, that's a lame Instagram joke. Seriously though, what would Ancestry.com add to Google of Facebook? Google would be more likely to blow up the premium model in favor of a more far-reaching, though potentially less lucrative, free ad-based genealogy solution. Facebook is also perpetually battling the silly rumor that it will begin to charge its more than 900 million active members to use the site. The last thing it needs is to add fuel to that nonsensical fire by buying a site where you have to pay to gain access to research tools.

Private equity is what really makes sense if Ancestry.com goes through with this. Ancestry.com is a strong and growing company. Revenue and earnings climbed 19% and 50% respectively in its latest quarter. This is truly a scalable model, and a well-heeled investor that can continue to grow this company -- out of the critical sight of a finicky market that triggers a sell-off over a show's cancellation or baseless accusations that the model will be disrupted -- is the best course for the company.

Ancestry.com has good genes. Maybe now it can find someone to take advantage of that, but it won't be Mark Zuckerberg or the fine folks at Google.

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The Motley Fool owns shares of Ancestry.com and Facebook. The Fool owns shares of Google. Motley Fool newsletter services have recommended buying shares of Ancestry.com and Google. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

 Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


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  • Report this Comment On June 08, 2012, at 12:34 PM, hiddenflem wrote:

    I disagree with you on this one Rick, I think this makes a great deal of sense for facebook to think about A.com: 30% of facebook users are bored with the service according to a survey out this week. The idea of facebook offering new ways of connecting people--to long lost relatives both dead and alive is a potentially enticing way of bringing people back into the fold--I'd use it. Not sure how much facebook cares about monetizing their business though critics seem to be paying more attention to it these days. Offering value added services like DNA testing...access to certain aspects of the site etc seems to have worked pretty well for the Motley Fool... why do you think it wouldn't work for Facebook? It already happens through Zynga's games etc even though it's not Fb who makes most of the money...

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