After two years of wooing, Angie’s List has finally agreed to be acquired by IAC. After the deal closes, Angie’s List will combined with HomeAdvisor, IAC’s home services marketplace, into a new public company called ANGI Homeservices.
The merger values Angie’s List at $8.50 per share, or about $500 million in total. This represents a 44.3 percent premium over the stock’s closing price on Monday, but is less than the $8.75 a share IAC offered (and Angie’s List rejected) back in November 2015.
This was one of multiple bids IAC, whose other companies include Tinder, made for Angie’s List, but its board thought $8.75 a share, which represented just a 10 percent premium over its stock price at the time, “dramatically undervalued” the company.
Angie’s List continued to struggle, however, despite dropping its membership fee and moving to a freemium model one year ago, as part of a growth strategy by new CEO Scott Durchslag. Though Angie’s List, founded in 1995 by William Oesterle and Angie Hicks, is one of the oldest and most respected review sites, it had difficulty finding its footing against newer rivals like Amazon Home Services, Facebook, Thumbtack, Handy, and Porch. The growth of its user base stagnated and its quarterly revenue over the last two years has been lackluster.
Combined, HomeAdvisor and Angie’s List will enjoy the advantage of scale, with a total of 22 million monthly visitors and 211,000 service providers. IAC claims that this makes it the “clear industry leader” in the home services marketplace and says that on a pro forma basis, the new company made an estimated $17 billion in transaction value over the last 12 months for its service providers.
Levin told Bloomberg that the merger is key to ANGI Homeservice’s transition from a recommendation platform to an on-demand marketplace.
“Home services is one of the last commerce categories where the vast majority of the market is still offline. That’s a huge opportunity,” Levin said.
The merger is expected to close in final quarter of this year. Afterward, IAC will own between approximately 87 percent to 90 percent of ANGI Homeservices’ equity value, depending on how many shareholders take the cash payout. IAC says the combined company will have a target five-year compound annual growth rate of revenue between 20 percent to 25 percent and its target adjusted EBITDA margin will be about 35 percent.
Chris Terrill, HomeAdvisor’s CEO, will take over as CEO of ANGI Homeservices, while Levin will serve as the chairman of its board of directors. Angie’s List chairman, Thomas Evans, and Hicks, who is currently its chief marketing officer, will join the new board of ANGI Homeservices. IAC hasn’t said what, if any, role Durchslag will play in the new company.