Shares of socializing and dating website The Meet Group (NASDAQ:MEET) spiked early Thursday, rising as much as 20.6% before reversing course, declining, and closing the day, still up -- but up only 7%.
Why? Ask Bloomberg.
On Thursday the business news site reported that dating app giant Match Group (NASDAQ:MTCH) has approached Meet Group to discuss buying out the latter.
If your reaction to this news is "what took them so long?" well, join the club. I've been wondering that myself.
Match and Meet seem to have similar business models, similar target audiences. They're pretty much the same company already (albeit Match is bigger and more successful). All they need is a merger -- and some money -- to formalize it. My guess is that after watching Meet Group stock nearly double in share price over the past six months or so, Match has been waiting and watching and hoping the price would come back down again, making a merger cheaper.
After Meet Group's last earnings report, though (sales up a healthy 15% and profits up more than 130%), a cheaper stock price for Meet doesn't seem to be in the cards, so Match has decided to bite the bullet and pay full freight.
Of course, this is all assuming Meet Group itself is amenable. As Bloomberg noted, "no final decision has been made," and there's no guarantee any deal will ultimately result from these talks. Furthermore, in December, Meet Group stock enjoyed a similar one-day surge in price that quickly faded after German broadcaster ProSiebenSat.1 Media SE, owner of eHarmony, apparently made its own overtures to Meet.
That buyout never happened. This one might not, either.