Angie’s List Inc rejected IACInterActiveCorp’s $8.75 per share offer this morning.
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Angie’s List CEO Scott Durchslag says he wants to allow the company’s “Profitable Growth Plan” to play out before entertaining any potential transactions.
After a comprehensive review, conducted in consultation with its independent financial and legal advisors, the Angie’s List Board determined that it is premature to conclude that a strategic transaction is in the best interests of Angie’s List shareholders. But its share price has dropped significantly since then, in the face of intense competition from Amazon and Yelp, and smaller but fast moving startups such as Thumbtack that offer viable alternative services.
One of these interested buyers has been IAC, which already owns online platforms that include mobile-dating app Tinder, Investopedia, and video sharing platform Vimeo.
In his response to IAC, he pointed out that the interests of the Angie’s List board and management “are aligned with all Angie’s List shareholders, as together we own more than 20% of the Company’s outstanding shares”. It also provides a new revenue generation unit, which is different from its current ad-revenue based model. In a letter sent to IAC, he added that the company has identified $10 million in cost reductions, among other changes in progress.
As you are aware, I was appointed as the new President and Chief Executive Officer of Angie’s List in September. The Match business accounted for a third of IAC’s overall revenue in the third quarter. The 2015 third quarter was the first profitable third quarter in the Company’s history. The company said the $8.75-per-share unsolicited buyout bid made by IAC “dramatically undervalues the company”, as it represented just a 10% premium to the stock price at the time.
Angie’s List said it would consider the offer, but on Tuesday it made its decision known: the company has chose to turn it down.
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Durchslag makes it clear that the company should have the opportunity to evaluate its Profitable Growth Plan, as well as share that plan with shareholders before reaching a decision as to whether to engage in a transaction with IAC/InterActiveCorp or any other party. “We are fully committed to this transaction and are confident that both Angie’s List stockholders and our stockholders will recognize the value of our proposal”.
