Internet Brands, a leading operator of vertical service-oriented websites that was spun off from Bill Gross’s Idealab incubator in a public offering three years ago, has agreed to be acquired by private equity firm for $640 million. The deal will see Hellman and Friedman Capital Partners take control of Internet Brands — which runs websites such as CarsDirect.com, Loan.com and UltimateCoupons.com — for $13.35 a share, which amounts to a 46-percent premium to the stock’s recent closing price.
In a blog post about the deal, President and CEO Bob Brisco commented on the fact that the company was going private again just three years after having gone public, saying Internet Brands had managed to prosper during its period as a public company “despite the most difficult economic, financial, and advertising market backdrop in about 85 years.” The CEO also said that despite going public “just as the global financial markets began to falter,” the stock has performed better than the rest of the market, noting that the acquisition price is almost 70 percent higher than the company’s IPO price, while the NASDAQ index has fallen by 10 percent over the same period.
Internet Brands had $99 million in revenue in 2009 — a drop from the $104 million it pulled in the previous year, but up from $90 million in 2007 — and made $12 million in net income last year. The company’s share price hit a low of $4.77 early last year before rebounding to around the $10 level earlier this year. The company was founded as CarsDirect.com in 1998, and until 2007, was a unit of Idealab, the Bill Gross-founded incubator that has been responsible for startups such as Overture, which pioneered the concept of keyword-related advertising and was acquired by Yahoo for $1.6 billion in 2003.
The acquisition offer by Hellman and Friedman Capital is likely to go ahead, since Idealab still controls 64 percent of the voting shares in Internet Brands through a special class of restricted stock.
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