Angie's List Says No to IAC Offer

Posted: Updated:
CEO Scott Durchslag says the board and management team are "united" behind Angie's List. CEO Scott Durchslag says the board and management team are "united" behind Angie's List.
INDIANAPOLIS -

Indianapolis-based Angie's List (Nasdaq: ANGI) says its board of directors has unanimously voted not to pursue an acquisition offer from the New York-based parent company of HomeAdvisor. In a statement, the company says InterActiveCorp's (Nasdaq: IACI) offer "dramatically undervalues the company and its long-term standalone prospects."

The company says it is "premature" to conclude that such a transaction is in its shareholders' best interests. Chief Executive Officer Scott Durchslag says the board and management team "are united in our belief in Angie's List and our market-leading platform." He says the company's Profitable Growth Plan is underway, and says feedback from members and service providers gives company leaders "confidence that we are heading in the right direction."

IAC's offer is valued at about $512 million in cash. HomeAdvisor is a Colorado-based competitor of Angie's List. Parent company IAC also owns digital properties including Tinder, Ask.com, Dictionary.com, the Daily Beast, College Humor and Match.com.

Durschlag sent the following letter to IAC CEO Joey Levin:

Dear Joey:

The Angie’s List Board of Directors, with the assistance of its independent financial and legal advisors, has considered your November 11, 2015 letter proposing to acquire Angie’s List for $8.75 per share in cash. Based upon a thorough analysis, the Board has unanimously reaffirmed the conclusion it reached and I communicated to you regarding IAC’s October 23, 2015 proposal to acquire Angie’s List for $8.50 per share. This followed your initial October 5 letter, when you first approached me regarding a potential combination.

We continue to believe that there is significant value embedded in the Company and that it is premature to conclude at this time that a strategic transaction is in the best interests of Angie’s List shareholders. We appreciate your interest in Angie’s List and your recognition of our market-leading platform.

As you are aware, I was appointed as the new President and Chief Executive Officer of Angie’s List in September. As announced on the third quarter earnings call, we are developing a new Profitable Growth Plan for the Company. While we expect to provide the details of this plan next quarter at our Investor Day, we are already beginning to execute some elements of it.

In addition to our new Angie’s Fair Price Guarantee and Angie’s Service Quality Guarantee announced last month, we launched LeadFeed last week, a new product designed to capture demand from free online visitors and turn that demand into leads for service providers. We have identified $10 million in cost reductions, redesigned the sales force, baselined Net Promoter Scores, changed media agencies, shifted ad spend toward digital channels, and began scaling our new Angie’s List 4.0 platform nationally.

In connection with our third quarter results, we reported improved efficiencies, including in selling and marketing expenses, together with increased quarter over quarter revenues, that led to expanding margins in the third quarter. The increased revenue reflects improved year on year service provider metrics, including increases in contract value, backlog, total members, first year member retention, web traffic, mobile web traffic and consumer and service provider participation in e-commerce. Additionally, we turned around the second quarter's sequential decline in participating service providers. The 2015 third quarter was the first profitable third quarter in the Company’s history.

The positive results we are seeing give us confidence in the direction we are heading. The market also appears to share our enthusiasm as the Company’s stock price increased 11% on the day we announced our third quarter results and previewed elements of this Profitable Growth Plan, and has increased 27% from that day through market close on November 11, prior to when IAC publicly announced its proposal1.

As I explained to you on our telephone call on November 3, the Board considered your October 23 proposal and concluded that it should have the opportunity to fully evaluate our Profitable Growth Plan and should share that plan with shareholders before reaching a decision as to whether to engage in a transaction with IAC or any other party. Nevertheless, IAC publicly announced its unsolicited $8.75 per share cash proposal only eight days later. Notably, this “increased” proposal represented only a 10% premium at the time it was made and dramatically undervalues the Company. We therefore believe it is not a compelling reason to shift our focus to IAC and derail the turnaround work we have underway, particularly given the long-term value creation potential of our plan. While such shift may be good for IAC shareholders, we do not believe it is in the best interest of Angie’s List shareholders.

The Board of Directors and management of Angie’s List are committed to enhancing shareholder value, and our interests are aligned with all Angie’s List shareholders’ as together we own more than 20% of the Company’s outstanding shares. 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. If the strategic logic underpinning your proposal is sound, it will still be sound next quarter when our Profitable Growth Plan is announced. 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.

On behalf of the Angie’s List Board of Directors,

Scott Durchslag

  • Perspectives

    • I Lost My Engagement Ring!

      You lose something of value and your first question is "is it covered?" Insurance policies provide a limited amount for such losses, but generally not enough to cover expensive items. To be fully reimbursed, what do you do?   When you purchase a standard homeowners or renters insurance policy, you assume all your personal property is fully protected in the event of a loss. That’s not necessarily true. Items of significant value, as well as any exclusive...

    More

Events



  • Most Popular Stories

    • Hoosier Cities 'Lowest Cost of Living' List

      Three communities top a national list of Cities with the Lowest Cost of Living in America. Niche.com, a site that focuses on public data on schools and neighborhoods, ranks four Indiana cities in the top 20. The site bases the rankings on factors including consumer price index and access to affordable housing, using data from the U.S. Census and the Bureau of Labor Statistics. You can see the full rankings by clicking here. The top 20 are...

    • Lilly Announces $72M Indy Investment

      Indianapolis-based Eli Lilly and Co. (NYSE: LLY) has announced plans to invest $72 million in an insulin manufacturing project at one of its Indianapolis facilities. The company says the investment will replace an existing insulin vial filling line and allow it to meet growing demand for its insulin products. The project is part of the $850 million in U.S. investments that Lilly announced in March. Chief Executive Officer David Ricks says the move...

    • Technicolor Details Indy Layoffs

      California-based Technicolor Inc. says it will close its office on the north side of Indianapolis by the end of the year. In a notice to the state, the company says the closure will leave 95 employees out of work. 

    • Another Tech Company Adding Indy Jobs

      Indianapolis has landed another win in what has been a busy week for the city's burgeoning tech industry. Software company myCOI has announced plans to expand its Indianapolis headquarters and create up to 185 jobs by 2021. The company, whose platform tracks and manages certificates of insurance, won last year's Venture Club of Indiana Innovation Showcase. Its clients include Caterpillar Inc. (NYSE: CAT), Cushman and Wakefield and the Indianapolis Motor Speedway.

    • Team 360 Stays in Indy For Expansion

      Indianapolis-based Team 360 Services has announced expansion plans that could result in nearly 140 jobs over the next two years. The fire protection and building services company currently employs more than 300, the majority of which are in Indianapolis. During an interview in March on Inside INdiana Business Television, Chief Executive Officer Michael Crafton talked about how a "bro hug" after a night out in Indianapolis helped launch Team 360 a decade ago.