IAC makes spinoff proposal to Match Group board

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InterActiveCorp. said Friday that it had made a “preliminary proposal” to Match Group Inc.’s board of directors regarding a transaction that would result in a Match spinoff from parent company IAC.

The New York-based media company disclosed in a release that the proposed transaction would be structured in a tax-free manner for IAC IAC, -0.04%  shareholders while also eliminating the dual-class common stock structure for Match Group such that all “pre-transaction” stockholders of both Match MTCH, +0.08%  and IAC would receive shares of a single class of stock representing one vote each.

“Today IAC proposed an important first step in the separation of Match Group from IAC,” IAC Chief Executive Joey Levin said in the release. “IAC is confident that the proposal communicated to the Match Group special committee provides strong footing for Match Group to begin its journey as a thriving, independent company.”

IAC announced in conjunction with its last earnings report that it was considering spinoffs of online-dating giant Match and home-improvement platform ANGI Homeservices Inc. ANGI, -0.44%, both of which trade as their own stocks while IAC maintains majority economic interest. IAC said at the time of its original announcement that it would look into spinning off both companies, one company, or neither, following a review.

Friday’s release offers that IAC doesn’t expect “to turn our attention to the question of a spin-off” of ANGI until it completes a transaction for Match.

Match has been the better performer of the two companies that were both incubated under IAC’s umbrella. Match, which owns the popular Tinder dating brand, went public in 2015 and has had an especially strong 2019, which shares up nearly 80% so far on the year. ANGI began trading as Angie’s List in 2011 and picked up the ANGI Homeservices name in 2017 when IAC merged the company with HomeAdvisor. Shares are off 58% year-to-date as the company works through advertising missteps and navigates search-algorithm changes made by Alphabet Inc.’s GOOGL, +0.59% GOOG, +0.53%  Google web search engine.

IAC shareholders currently own 2.6 shares of Match and 4.8 shares of ANGI for each IAC share they own. At Match’s Thursday stock closing price of $76.02 and ANGI’s close of $6.77, that implies a value of $197.65 per share for the Match holdings and $32.50 for the ANGI holdings, for a combined value of $230.15.

Meanwhile, IAC’s stock closed Thursday at $225.07, implying that the company’s stock price doesn’t fully reflect the value of its stakes in Match and ANGI and ascribes negative value to the rest of IAC’s portfolio, including video-editing platform Vimeo and media unit Dotdash.

IAC shares have climbed 23% so far in 2019, as the S&P 500 SPX, +0.64%  has advanced 17%.