INDIANAPOLIS--(BUSINESS WIRE)--Angie's List (Nasdaq:ANGI) today announced that its Board of Directors has unanimously determined not to pursue the unsolicited proposal from IAC/InterActiveCorp (Nasdaq: IACI) to acquire the Company, as previously announced on November 11, 2015.
After a comprehensive review, conducted in consultation with its independent financial and legal advisors, the Angie’s List Board determined that it is premature to conclude that a strategic transaction is in the best interests of Angie’s List shareholders. Further, the Angie’s List Board of Directors concluded that IAC’s $8.75 per share cash proposal dramatically undervalues the Company and its long-term standalone prospects. The proposal represented only a 10% premium at the time it was made.
Scott Durchslag, Angie’s List President and Chief Executive Officer, said, “The Angie’s List Board and management team are united in our belief in Angie’s List and our market-leading platform. That IAC chose to announce its proposal on the same day as our public launch of LeadFeed is a testament to the strength of our evolving product and services offering. 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. The Board believes 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.”
Mr. Durchslag continued, “The development of our Profitable Growth Plan is underway, as we discussed with our third quarter results, and we look forward to announcing the details of this plan next quarter at our Investor Day. The positive reception we are receiving from members and service providers to our new offerings gives us confidence that we are heading in the right direction. 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 some elements of our Profitable Growth Plan, and has increased 27% from that day through market close on November 11, prior to when IAC publicly announced its proposal.”
The following is the text of the letter that was sent on November 17, to IAC’s Chief Executive Officer, Joey Levin:
| November 17, 2015 | |||||
| Joey Levin | |||||
| Chief Executive Officer | |||||
| IAC/InterActiveCorp | |||||
| 555 W 18th St | |||||
| New York, NY 10011 | |||||
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, | |||||
| /s/ Scott Durchslag | |||||
| Scott Durchslag | |||||
| President and Chief Executive Officer | |||||
| cc: Board of Directors of Angie’s List | |||||
BofA Merrill Lynch is serving as a financial advisor to Angie’s List and Sidley Austin LLP is serving as a legal advisor.
1 Based on Angie’s List closing stock prices on 10/20/15 and 11/11/15; 11/11/15 closing stock price prior to announcement of IAC proposal
About Angie's List
Angie's List helps facilitate happy transactions between more than three million consumers nationwide and its collection of highly-rated service providers in 720 categories of service, ranging from home improvement to health care. Built on a foundation of authentic reviews of local service, Angie's List connects consumers directly to its online marketplace of services from member-reviewed providers, and offers unique tools and support designed to improve the local service experience for both consumers and service professionals.
Forward-Looking Statement
Certain statements in this release are "forward-looking statements" made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended. These forward-looking statements are based on our current assumptions, expectations and beliefs and involve substantial risks and uncertainties that may cause results, performance or achievement to materially differ from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: our success in converting consumers and service providers into paid memberships and participating service providers, respectively; our ability to renew memberships and participating service providers; our ability to predict and respond in a timely manner to changes in consumer demand; our ability to attract and retain key management and personnel; competitive factors; our ability to successfully implement our growth strategies or effectively manage our growing business; and general economic conditions and the corresponding impact on consumer confidence and spending. For a discussion of these and other risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking statements, please refer to the filings we make with the Securities and Exchange Commission from time to time, including our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. All forward-looking statements in this press release are based on information currently available to us, and we assume no obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.