Angie's List executives are betting on themselves, and not taking a proposed buyout.
The company’s board unanimously voted to turn down an offer from InterActiveCorp, agreeing that it wasn't in the best interest of shareholders. It was a decision they had seemingly reached before last week when IAC leaked details of its acquisition proposal to the public, in an effort to involve Angie's List stockholders in the decision.
Indianapolis Financial Advisor Pete Dunn says it’s typical for companies to ramp up pressure when their initial offers don't seem to have much traction.
“Sometimes the company starts what’s called ‘going hostile’, which is to go public, to put pressure on the organization via their shareholders,” he says.
In a statement, the Angie’s List board says the deal "dramatically undervalues" the company. The buyout offer came in at around $8.75 a share, or about $512 million total and would have merged Angie's List with IAC’s HomeAdvisor service.
At the time it was made, the offer was above market rate. But Angie's List was trading around at close to $10.00 a share by Tuesday morning.
Dunn says from an investor’s perspective, the buyout offer may have seemed like a no-brainer for the company, but for Angie's List, the decision to nix the proposal probably reflects the recent hire of a new CEO.
CEO Scott Durschlag took over for departing CEO Bill Osterle, who resigned from his position shortly after the RFRA controversy. Dunn says by not taking the deal, the company is allowing Durschlag's vision to run its course.
“It’s like, let’s give our plan a chance to take hold, and if it doesn’t work, and maybe another offer comes along, we’ll deal with it,” Dunn explains. “But you don’t just hire a brand-new CEO and then just pull the rug out from everybody.”
New York-based IAC owns several websites, including About.com and HomeAdvisor.com.
According to analysts, Angie’s List is on track to post its first annual profit in its 20-year history.
