The board of directors for Angie’s List rejected a proposal Tuesday from New York-based IAC/InterActiveCorp to acquire the local recommendations service, claiming the all-cash deal “dramatically undervalues” the company.
In a letter to IAC CEO Joey Levin, Angie’s List says the $8.75-per-share offer from IAC represented a 10% premium when the deal was proposed on October 23.
Angie’s List CEO Scott Durchslag says he wants to allow the company’s “Profitable Growth Plan” to play out before entertaining any potential transactions.
“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,” said Durchslag.
Shares of Angie’s List are getting pounded in pre-market trading, down 13%.
The local recommendations service is poised to earn its first annual profit since its founding 20 years ago. Last quarter, Angie’s List reported net income of $82,000, compared to a loss of $5.2 million a year ago.
Last week, IAC acknowledged Angie’s List wasn’t interested in the deal before the company stepped forward claiming it was reviewing the proposal.
“The combination of the Angie’s List brand, highly trafficked website and its network of paying service professionals with our HomeAdvisor business, the category leader which has seen eight consecutive quarters of accelerating growth in its core U.S. business, would cement our position as the premier home services platform,” said Joey Levin, CEO of IAC/InterActiveCorp, in a statement released last week when the proposal was announced. “We are fully committed to this transaction and are confident that both Angie’s List stockholders and our stockholders will recognize the value of our proposal.”
Follow Brett Molina on Twitter: @brettmolina23.