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Angie's List Rejects Tinder Owner IAC's Takeover Bid

Ryan McQueeney
Updated

Angie’s List ANGI, an online home services marketplace, has officially rejected a takeover offer from IAC/InterActiveCorp IACI, a media conglomerate with a portfolio including the popular dating app Tinder. The deal would have been worth around $512 million, or $8.75 a share.

“The Board does not believe it is in the best interest of Angie’s List shareholders to rush to judgment and that doing so would be contrary to our fiduciary duties,” said Angie’s List CEO Scott Durchslag in an open letter to IAC. “Once our Profitable Growth Plan is completed and our shareholders informed, we will of course consider any value enhancing alternative to the plan, including a transaction with IAC or other third parties.”

This was the second bid from IAC to takeover Angie’s List, which operates as both a marketplace for independent contractors and a user-generated review site. IAC originally offered $8.50 per each Angie’s List share back in October.

Angie’s List went public back in 2011, but the company has lost money every year since its IPO. This is due in part to the thin margins that come with marketplace business models, as well as increased competition large companies like Amazon AMZN, as well as startups like Thumbtack.

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IAC’s large portfolio of internet brands could give Angie’s List exactly what it needs: scale. Angie’s List certainly needs to scale-up if it wants to turn a profit, but expansion costs would cripple the company right now. In contrast, IAC could leverage its own portfolio to grow Angie’s List.

The news also comes as IAC goes through a different M&A move: its Match Group subsidiary—which includes Tinder, Match.com, and OkCupid—filed for an IPO last week. IAC will continue to own all shares of Match Group’s Class B stock (also read Tinder Parent Match Group IPO: What You Need to Know).

Currently, Angie’s List has a Zacks Rank #2 (Buy). Despite slumping a bit following the news, the stock has recovered a bit and current share prices of $9.85 are still higher than IAC’s offer. IAC currently has a Zacks Rank #3 (Hold).

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IAC/INTERACTIV (IACI): Free Stock Analysis Report
 
AMAZON.COM INC (AMZN): Free Stock Analysis Report
 
ANGIES LIST INC (ANGI): Free Stock Analysis Report
 
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