Please ensure Javascript is enabled for purposes of website accessibility

Is There a Black Sheep in's Family?

By Rick Munarriz - Oct 22, 2012 at 4:45PM

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 leading genealogy website operator is being acquired for $32 a share. The $1.6 billion deal isn't the dowry that bulls were hoping for.

After months of chatter, (ACOM) is finally getting hitched.

European private-equity firm Permira is agreeing this morning to a $1.6 billion deal that will take investors out at $32 a share.

The deal represents a buyout at a modest 9.7% premium to where shares of the leading genealogy website operator closed on Friday.

Shareholders were probably holding out for more, and you're already starting to see a wave of hungry attorneys trying to drum up interest in class action lawsuits. In the end, it probably doesn't matter.

There were reportedly several potential bidders kicking the tires of the premium website. If the prospects were that good, do you really think would've settled for an acquisition in the low $30s? After all, recent reports indicated that Permira was the last bidder standing with a $32 offer. didn't want to cash out for less than $38. The initial reports were suggesting a buyout would take place in mid-to-upper $30s.

Now that $32 is the price -- validating the report -- we have to assume that wasn't the one holding the stronger hand.

Sure, there was speculation back in July that Facebook (FB 0.65%) or Google (GOOGL 3.61%) would dive into the bidding war, but that was really little more than wishful thinking on behalf of matchmaking analysts.

Facebook already has its own way of getting families together, and the last thing it needs is to be associated with a provider of premium lifestyle services. It routinely needs to be squashing the "Facebook is going to start charging its users" rumor. Why feed that fire? Google would make more sense -- especially since it could ultimately offer an ad-supported version of's deep content -- but it could just as easily roll out its own platform.

Perhaps more important for investors, today's buyout hints that Wednesday's quarterly report out of isn't going to be so hot. After all, why agree to a deal now if blowout financial results are coming?

Yes, I predicted over the weekend that was going to beat Wall Street's bottom-line expectations. Why not? The former dot-com darling has blown past analyst profit targets with ease over the past year.


Estimated EPS



Q3 2011




Q4 2011




Q1 2012




Q2 2012




Source: Thomson Reuters.

However, today's move suggests that I'll either be eating crow on Wednesday or that the company's guidance will be iffy.

Ever since Comcast's (CMCSA 0.36%) decision to end Who Do You Think You Are? -- the primetime show that it produced in cahoots with where celebrities dig into their ancestors -- it seems as if the company has been angling for an exit strategy. Subscriptions did top 2 million members this summer, but either is unsure about its future or it feels that now is the time to hand the baton to a more global company with dreams of taking it to the next level.

It's not the way that investors wanted this family reunion to end, but it's better to have a bittersweet dessert than no treat at all.

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 LLC Stock Quote LLC
Alphabet Inc. Stock Quote
Alphabet Inc.
$2,233.61 (3.61%) $77.76
Meta Platforms, Inc. Stock Quote
Meta Platforms, Inc.
$192.88 (0.65%) $1.25
Comcast Corporation Stock Quote
Comcast Corporation
$44.29 (0.36%) $0.16

*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 05/27/2022.

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.