Adam Putz May 02, 2017
Online services conglomerate IAC (NASDAQ: IAC) has agreed to acquire Angie’s List (NASDAQ: ANGI), a platform for reviewing and finding local home-improvement service providers. Both companies posted big gains on the news, with IAC’s shares popping 14% Tuesday and Angie’s List landing a staggering 62% gain. At $8.50 per share, the deal values Angie’s List at $500 million, a premium of 44% over its closing price Monday.
At its heart, the deal represents the expansion of IAC’s own services platform, HomeAdvisor, combining its network of some 156,000 listed service professionals with the roughly 55,000 currently on Angie’s List. The transaction will create a new publicly traded company, ANGI Homeservices, catering to the $400 billion domestic home services market. In short, IAC is angling to make its platform the on-demand home services equivalent of Amazon.
IAC also has stakes in dating sites OKCupid and Tinder, two companies that, on the surface, bear little resemblance to Angie's List. But the recommendation company does have a few things in common with IAC's matchmaking services: It provides a high-tech way for people to search for something that exists offline, and it connects supply with demand.
"We love these category leaders in big consumer verticals where we can ride an obvious offline to online migration with winning products and multiple brands. We did it in dating, travel, and ticketing, and we expect we'll do the same with home services," IAC CEO Joey Levin (right) said in a news release.
IAC's list of investments represent some of the most recognizable names in online services, whether that’s Expedia (acquired in 2003, divested 2005) and TripAdvisor (acquired 2004, IPO 2011) or its current holdings in dating sites like OKCupid (acquired 2011) and Tinder (acquired 10% stake 2014), both housed under the umbrella of the Match Group (IPO 2015). Since 2003, IAC has completed 30 M&A deals, per the PitchBook Platform, with B2C companies representing almost half of all targets at 47% and IT companies accounting for another 37%.
The Angie's List deal exploits operating synergies valued at up to $250 million annually, as the combined company grows a monthly active user base of some 22 million visitors to disrupt a marketplace for home services still dominated by word-of-mouth recommendations.
Angie's List stockholders can either receive one share of Class A stock in ANGI Homeservices or $8.50 per share in cash for each share of Angie's List stock that they own, up to a total consideration of $130 million. It’s the first time IAC will list its home services division publicly, capitalizing on a successful track record of exiting investments to the public markets.