IAC's Home Advisor effectively acquired Angie's List today in a deal that will create a new publicly traded business called ANGI Homeservices Inc. that will maintain both companies' brands..
The deal's terms call for Angie's List stockholders to get either one share of Class A common stock of ANGI Homeservices or $8.50 in cash per share, with the total amount of cash distributed to be capped at $130 million. While class A shares will be worth one vote each, IAC's stake will be converted into class B shares worth 10 votes apiece. Once the deal closes--something the two sides expect to take place in the fourth quarter--IAC will own between 87% and 90% of the combined company and 98% of the voting shares.
In addition, HomeAdvisor CEO Chris Terrill will become CEO of ANGI Homeservices Inc., and the new business' headquarters will be located in the same Golden, Colo., space that is now HomeAdvisor's main office. And IAC will have a majority of the members of the new company's board of directors.
Combining the two social media giants "will offer unparalleled scale and product breadth to match homeowners with service professionals in the $400 billion domestic home services market"--a market that is still "immature," IAC said in a press release. "...Homeowners will be able to tap into North America's largest combined network of active, high-quality service professionals between HomeAdvisor's network of more than 156,000 and Angie's List's network of more than 55,000, collectively up 24% year-over-year as of the first quarter of 2017."
The combined company will have a target five-year compound annual growth rate of revenue of 20% to 25%. Synergies between the two will have annual value of $100 million to $250 million by the end of 2018.
"Both Angie's List and HomeAdvisor have built impressive businesses based on delivering homeowners and home service professionals incredible value," said Chris Terrill, CEO of HomeAdvisor. "We've only just scratched the surface of this tremendous market opportunity, given 90% of home improvement transactions are still generated via word-of-mouth. By combining HomeAdvisor and Angie's List's complementary strengths, the combined company will be able to leverage its joint models and resources to not only accelerate market penetration, but also continued online conversion of that marketplace."