💻 Are Acquisitions IAC’s Core Strategy?

Southwest cancels flights; Honeywell raises outlook.

Hey Global Investor! Here’s what you need to know before the US markets open.

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💻 IAC: Wheeler Dealer Diller?

Barry Diller’s InterActiveCorp. ‘s (IAC) digital media unit Dotdash has agreed to acquire American media conglomerate Meredith Corporation (MDP) for $2.7B in cash. This deal brings some of the influential digital media properties under one roof. (Tweet This)

Lean Mean Acquisition Machine

This is a story of too many acquisitions and divestments. What is common between Saturday Night Fever (1977), Raiders of the Lost Ark (1981), and Indiana Jones and the Temple of Doom (1984)? Yes, these were all produced by Paramount Pictures. More importantly, Barry Diller was at the helm at Paramount during this period.

Under Diller’s leadership, Paramount also produced hit TV shows such as Laverne & Shirley (1976) and Taxi (1978). Diller moved from Paramount to 20th Century Fox in 1984. Here, he was instrumental in launching the Fox Network, cult shows like Married…with Children, and The Simpsons.

Silver King Broadcasting Company was founded in 1986 to consolidate ownership of local TV stations. In 1995, Diller acquired Silver King and its parent company and changed the name to USA Networks. The company continued its growth strategy through acquisitions, acquiring, along the way, Ticketmaster, Sci-Fi channel, and Hotel Reservations Network.

As the business moved online, the company changed its name to USA Interactive in May 2002 and InterActiveCorp in June 2003. Today, IAC owns brands across 100 countries globally. It has acquired and spun off several popular businesses along the way, including the Match Group and Vimeo.

Digital Is The Mantra

Founded in 1902, Meredith Corporation owns magazines, TV stations, websites, and radio stations. The company’s publications have a readership of over 120M and paid circulation of over 40M. Meredith became the largest magazine publisher in the US when it acquired Time Inc.’s assets in 2017. In 2018, it sold Time to Salesforce’s CEO Marc Benioff for $190M in cash.

In 2012, IAC acquired about.com from New York Times for $300M in cash. It was rebranded as Dotdash and now houses 14 health, finance, lifestyle, food, and beauty brands. As of 2020, Dotdash reported revenue of $214M and EBITDA of $66M.

Dotdash will acquire Meredith for $2.7B, and the combined company will be known as Dotdash Meredith. This deal values Meredith at $42.18 per share. The deal will bring together over 40 of Meredith’s brands, including Better Homes and Gardens, Southern Living, and InStyle magazines with Dotdash’s digital labels like The Spruce, and Byrdie and Brides.

The combined digital units are expected to reach over 175M online consumers every month, including 95% of the female population in the US. Also, these digital assets are expected to contribute to 70% of Dotdash Meredith’s 2021 EBITDA. This combined business is expected to generate advertising revenue of over $1B this year.

Dotdash has seen 17 consecutive quarters of double-digit growth, which is only set to improve further with Meredith coming into its fold. As Dotdash sets its sights on becoming a full-scale digital enterprise, Meredith will provide some much-needed ammunition to this end.

Shareholders of both companies are cheering the deal wholeheartedly. Doordash Meredith will rank among the top-10 publishers in terms of audience size. It seems nothing can stop it from making a dash to the top! Barry Diller is having the last laugh online.

Market Reaction
IAC ended at $140.82, down 0.78%. Shares are up 15% this year.

Company Snapshot 📈

IAC $140.82 -1.11 (0.78%)

Analyst Ratings (18 Analysts) BUY 83%  HOLD 17%  SELL 0%

Newsworthy 📰

Turbulence: Southwest cancels many flights, blames weather and air traffic control issues (LUV -0.22%)

Unrest: Deere workers reject six-year labor contract (DE -0.27%)

Upbeat: Honeywell raises outlook for business jet deliveries as demand rebounds (HON -0.31%)

Today’s Market Terminology: Trend Reversal

A reversal in trend is a change in direction of a stock or any other type of asset class. A trader should be able to spot the potential of a reversal signal so that they can consider exiting the trade when conditions no longer look favourable

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