University of Indianapolis associate professor of finance Matt Will says he’s "surprised it took this long" for an acquisition offer for Indianapolis-based Angie’s List Inc. (Nasdaq: ANGI), and thinks it’s "very probable" a deal will come within a year. Will believes an agreement with the New York-based parent company of HomeAdvisor is one of the better scenarios for Indianapolis and could even result in more operations coming to the city. Angie’s List says it is reviewing the proposal from InterActiveCorp (Nasdaq: IACI), which offered about $512 million in cash.
Will says an acquisition by another company, such as TripAdvisor LLC, could lead to layoffs or closures because they may have similar operations to Angie’s List in other locations. He says a potential deal with InterActiveCorp could actually lead to operations and workers coming to Indianapolis from Colorado.
IAC’s offer was $8.75 per share of Angie’s List common stock. Will says, shortly after news of the offer, Angie’s List stock rose to $8.85, which he believes is closer to the appropriate value. He says Internet companies are often based on customer or service provider numbers, rather than cash flows.
Will says he was not surprised at all by IAC’s unsolicited offer, saying, "Angie’s List was always intended to sell." He says, while IAC may not end up being the final buyer, the offer "begins the process" of the company’s ultimate acquisition. He says other potential buyers, including TripAdvisor and Facebook Inc. (Nasdaq: FB), could get involved.
Will believes Angie’s List was undervalued in the initial offer.