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In the aftermath of Hellman and Friedman’s $640 million purchase of Internet Brands earlier this week, Merriman Capital Analyst Richard Fetyko suggested (via TechTraderDaily) that online wedding company The Knot (NSDQ: KNOT) could be another publicly traded-buyout target, saying that the company has “a leading position” in a vertical, “high organic traffic,” and could be of interest to an offline media company. Using those criteria, we decided to scout out some other potential digital media takeover targets. Our picks, below.
Unlike other big photo sites, Shutterfly makes most of its money by printing photo books and related wares put together from photos that people upload to its site. The company has a very loyal — and growing — customer base; 74 percent of its customers last quarter were previous shoppers and the company’s customer base grew 18 percent last year.
A number of offline companies could be very interested, including the major greeting card companies, which have their own similar services. There’s also been interest in this space from big box retailers which can use their stores as delivery outlets. Just this week, craft chain Michaels bought scrapbook startup ScrapHD. Shutterfly is valued at just over $700 million.
WedbMD’s market cap — $3.05 billion — is significantly larger than that of Internet Brands but we have to mention it here because it fits all of the criteria Fetyko lists. Its consumer portal ranks as the top health site on the web, averaging more than 61 million unique visitors a month last year, up from 51 million in 2008. The company’s financials are very healthy. Revenue was up 15 percent last year to $438 million. Net income was $117 million.
The company could be an attractive target for any offline media company that wanted to make a splash in an online category that performed well even during the midst of the recession. There’s also been recent interest in the space from PE firms; Vestar Capital Partners took HealthGrades private in a $294 million deal in July.
Another candidate is TechTarget, which owns a network of sites all geared toward IT professionals. Revenue dropped last year to $87 million from $105 million, but the company’s performance has improved significantly this year.
Since going public in 2007 at $13 a share, the company’s stock has fallen nearly 64 percent. It’s now valued at $228 million. All of the b-to-b tech players — including the very acquisitive United Business Media (LSE: UBM), IDG, and Ziff Davis, which has said it is in the market for acquisitions — might want to take advantage of that fall-off.
As for The Knot, it ranks number one in the online wedding category — and has made forays into the newlywed and pregnancy spaces. Fetyko listed a who’s who of major media firms as potential buyers, including NBC Universal (NYSE: GE), CBS (NYSE: CBS), Disney (NYSE: DIS), Hearst, Fox Interactive, Gannett (NYSE: GCI), Liberty Media (NSDQ: LINTA), Meredith (NYSE: MDP) and Viacom (NYSE: VIA) as buyers. I would add Conde Nast, which owns Bride magazine. It’s valued at $294 million.
What other companies are we missing?