HOMEADVISOR DEAL FOR ANGIE’S LIST VALUED AT $500M

Colorado’s newest public company completes $500 million acquisition of Angie’s List

As large as HomeAdvisor has already become, it grew its staff by 33 percent Monday as parent IAC/InterActiveCorp completed its acquisition of rival Angie’s List in a deal valued at $500 million.

HomeAdvisor and Angie’s List officially combined Monday under the new name of ANGI Homeservices and took Angie’s spot on the Nasdaq exchange to become Colorado’s latest public company.

“Angie’s List is a very powerful brand, more well-known than HomeAdvisor. We think we can help leverage the brand,” said Chris Terrill, HomeAdvisor’s CEO who becomes CEO of the new company. “You just get massive scale between the two companies and scale matters in this space.”

According to the terms of the deal, IAC paid $8.50 per share for Angie’s List, though the cash payment was capped at $130 million. IAC now owns about 90 percent of the combined company.

The company’s shares, which trade under the ticker ANGI, closed Monday at $12.76, down 24 cents from the opening price of $13. Bloomberg listed the company’s market cap at $6.2 billion.

Though better known, Angie’s List makes less money. In its most recent quarter, which ended June 30, the company reported revenue of $72.8 million, down 12 percent from a year ago. It also had a net loss of $8.1 million, compared with net income of $4.7 million a year ago. As of Jan. 31, it employed 1,567 people.

But Angie’s List has already been trimming staff. The Indianapolis company cut 70 jobs in June and then confirmed last month that another 230 workers would lose their jobs after HomeAdvisor takes over, according to The Indianapolis Star.

Terrill said that about 1,000 Angie’s List employees are joining the company, bringing the combined staff to about 4,000. The headquarters remain in Golden.

Terrill said he didn’t have anything to announce about Angie’s List operations in Indiana, only that “we’re committed to keeping Angie’s List in Indianapolis. We think Angie’s List has been an important part of that business community. At the same time,

we are exploring all of our options.”

HomeAdvisor doesn’t have much room in existing space in Colorado anyway. It employs about 1,500 people in the state. The company recently expanded its square footage in Golden and is in the process of building a new downtown Denver headquarters, which should be ready by 2019.

While both companies connect homeowners to home-services companies, such as plumbers and painters, the big difference is in who pays for the connection. At HomeAdvisor, consumers freely browse potential service companies, while the service companies pay HomeAdvisor to connect with homeowners who request work.

Over at Angie’s List, service companies don’t pay to be listed in a consumer guide. Instead, consumers paid a membership fee to access reviews of companies. Last year, Angie’s List dropped the membership fee to focus on charging service providers advertising fees to promote themselves in front of consumers.

“We think Home Advisor has a better business model and has executed far better while (Angie’s List) has built a stronger consumer brand and higher quality pool of service providers,” said Rob Sanderson, a senior analyst with MKM Partners, in a report. “This combination makes sense in our view.”

HomeAdvisor also is known for is its technology to help consumers search for services and offer service providers tools from small things like an online presence to mobile apps and Instant Booking, a tool that books customers to available openings on a professional’s calendar.

That has helped HomeAdvisor thrive, most recently seeing its quarterly revenues increase 39 percent to $180.7 million in the quarter ended June 30. Its operating income fell 31 percent to $8.3 million, which was blamed on costs related to buying Angie’s List.

The competitors have about a 20 percent overlap in service providers, Terrill said.

HomeAdvisor debuted in the fall of 2012, but it was really just a new name for ServiceMagic, which was founded in 1998. The risky rebrand was spearheaded by Terrill, who joined in 2011.

Five years later, Terrill feels that HomeAdvisor has come a long way in terms of brand recognition. But he admits that Angie’s List is much better known among consumers, to which he credits Angie’s longer life — it was founded in 1995 — and heavy spending on TV commercials.

“What’s really exciting for everyone at Angie’s List and HomeAdvisor and what should be exciting in Colorado, is Denver is becoming the undisputed leader of home services,” Terrill said. “Having another publicly traded company here, it’s validation that Denver is on the map and the place to be for technology and innovation.”