Home Advisor Parent IAC Wants to Buy Angie’s List to Build Home Services Power House

Interactive Corp. (IAC) sought unsuccessfully to engage Angie’s List’s management in takeover talks. Now the company, which owns rival Home Advisor, announced a direct bid to shareholders of $8.75 per share — essentially a hostile takeover attempt worth more than $500 million.

IAC wants to combine Angie’s List and HomeAdvisor into a single entity. Home Advisor is the former Service Magic. The combined entity would reportedly have revenues of more than $700 million annually. There would also be operational efficiencies and it would remove some fragmentation from the home services market, which is worth more than $300 billion annually.

Angie’s List Member Renewal Rates

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Source: Angie’s List Q3 2015 investor presentation

Angie’s List’s largest shareholders are reportedly supporting the deal. The company has 3.2 million paid consumer-subscribers but has struggled somewhat as a public company against free competitors such as Yelp and others. The company says, however, that its metrics are all moving in a positive direction. Subscriber renewal rates are roughly 77% (see above).

Angie’s List was founded in 1995 and went public in 2011. The company had its first profitable quarter in Q3 2015.

Angie’s List and Home Advisor competitor Thumbtack has raised $225 million over the past 18 months and has impressive acquisition and retention metrics. The company says it has 200,000 small business customers (who pay for leads) but no sales reps.

If I had to bet I would guess that Angie’s List will be acquired but perhaps at a higher premium. News of the takeover bid has boosted the company’s share price.

Would that combination be good for either or both companies? Would it successfully create a leading brand in the home services market? And what brand would be the chosen one? What’s your view?

One Response to “Home Advisor Parent IAC Wants to Buy Angie’s List to Build Home Services Power House”

  1. I’m surprised they didn’t just take it. Like you, I’d expect they will accept an offer for slightly more, maybe another 50 cents a share.

    With their financial position, broken business model, lack of platform sophistication, and the competitive landscape heating up, Angie’s List isn’t going to get any other $500 million cash offers.

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