Will IAC's proposed deal earn Angie's Lists' seal of approval? Image: Angie's List.
What: Shares of Angie's List (ANGI +0.00%) jumped as much as 15% higher on Thursday. The stock later settled down to roughly a 12% overnight gain, which still is enough to set a fresh 52-week high.
So what: This wasn't an earnings move, but a buyout boost. Online services veteran IAC/InterActiveCorp (IACI +0.00%) has launched an unsolicited offer for Angie's List, proposing to pay $8.75 per share in an all-cash deal format. But if Angie's management prefers, IAC would also be open to a tax-free stock-for-stock deal instead. In this case, Angie would effectively merge with IAC subsidiary HomeAdvisor.
Now what: Angie's List's board of directors has acknowledged the proposal, but has neither accepted nor rejected the pair of options yet. The board and its long list of financial advisors will review IAC's deal ideas and come back with an official recommendation later on.
So there's not just one but two firm offers on the table, both from the same suitor but tied to diametrically opposed deal structures.
IAC notes that the buyout price represents a very rich multiple to Angie's full-year EBITDA profit guidance, especially considering the target company's modest revenue growth.
The companies have reportedly talked about joining forces in the past, but Angie's List broke off those talks in early October and refused to sit down behind locked doors again. Thus, IAC's offer letter makes no bones about preferring to work this out in private, away from the public eye, but the deal is now very much in the public eye anyhow. What could have been a low-key and fully hammered-out merger has now become an attempted hostile takeover -- albeit perhaps the friendliest such attack I've ever seen.
The ball is now in Angie's List's court. For what it's worth, investors seem to have their sights set on hardball negotiations, as the stock trades slightly above IAC's offer price as of this writing.
