Please ensure Javascript is enabled for purposes of website accessibility

Why XO Group Inc. Stock Popped Today

By Steve Symington - Updated Sep 26, 2018 at 1:54PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The parent company of The Knot is being acquired. Here's what investors need to know.

Shares of XO Group Inc. (XOXO) were up 26% as of 3:00 p.m. EDT Tuesday after the parent company of The Knot agreed to merge with WeddingWire, Inc. in a deal valued at $933 million. 

More specifically, WeddingWire's lead investors -- Permira Funds and Spectrum Equity -- will acquire XO Group for $35 per share in cash, good for a 44% premium to XO's 12-month average closing price and a 27% pop from Monday's close.

Dark and light chess pieces with a half-dark, half-light pawn in the center of the board; mergers and acquisitions concept.


So what

The combined company will be privately held, with WeddingWire CEO Tim Chi and XO Group CEO Mike Steib serving as co-CEOs. It will also maintain both The Knot and WeddingWire brands as separate consumer products while simultaneously allowing each brand to benefit from their "expansive complementary networks and diversified features." And of course, the combined company will also include XO's other life-stage websites The Nest, GigMasters, The Bump, How He Asked, and Lasting.

"This is a proud day for XO, a tribute to the dedication of the amazing people at this company, a terrific outcome for our stockholders, and another positive step toward our mission of serving the couples and wedding pros we love," added Steib.

Now what

The transaction has been unanimously approved by XO's board of directors. So assuming it also receives shareholder and regulatory approval in a timely fashion, the acquisition is expected to close in the first half of calendar 2019.

With shares currently trading a few pennies above the agreed acquisition price -- and assuming waiting longer to sell doesn't result in more favorable long-term capital gains tax treatment -- I think XO investors would do well to take profits and put that money to work elsewhere.

Editor's note: A previous version of this article stated that WeddingWire would acquire XO Group; instead, WeddingWire's investors will acquire it. The Fool regrets the error.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

XO Group Inc. Stock Quote
XO Group Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.