IAC To Spin-Off ANGI On April Fools’ Day

IAC Inc. Announces Spin-Off of ANGI Inc.: A Strategic Move for Growth and Focus

On March 10, 2025, IAC Inc. (NASDAQ: IAC), a diversified media and internet company, announced the record and distribution dates for the planned spin-off of its entire stake in ANGI Inc. (NASDAQ: ANGI), a leading digital marketplace for home services. This move is part of IAC’s strategy to streamline its portfolio, unlock value, and focus on high-growth opportunities. The spin-off will be effected through a pro-rata distribution of 84.2% of the outstanding shares of ANGI common stock to holders of IAC common stock, with the transaction designed to be tax-free for U.S. federal income tax purposes.

The spin-off process is set to commence with a record date on March 25, 2025, and the distribution date on March 31, 2025. IAC stockholders will receive approximately 0.5178 shares of ANGI Class A common stock for each share of IAC stock, subject to change based on the number of shares outstanding on the record date. Fractional shares will not be distributed, and instead, stockholders will receive a cash payment. ANGI Class A common stock will continue trading on NASDAQ under the ticker symbol “ANGI,” while IAC common stock will remain listed under “IAC.” The spin-off marks a significant step in IAC’s history of creating value through strategic separations, having previously spun off companies like Vimeo, Match Group, and LendingTree.

Deal Overview: Restructuring for Enhanced Growth and Focus

The decision to spin off ANGI is part of IAC’s broader strategy to simplify its portfolio and allow both companies to focus on their respective business needs. ANGI, formed in 2017 through the merger of Angie’s List and HomeAdvisor, has faced challenges in recent years, including declining revenues and operational difficulties. The separation aims to provide ANGI with greater independence and flexibility to pursue growth opportunities, while enabling IAC to concentrate on its core digital businesses, including Dotdash Meredith, search websites like Ask.com, and care services like Care.com.

As part of the spin-off, ANGI’s board of directors approved a reverse stock split at a one-for-ten ratio, effective March 24, 2025. This move is intended to improve the stock’s marketability and consolidate shares. Additionally, ANGI’s dual-class structure will be eliminated, converting all shares to a one-share/one-vote common stock, enhancing corporate governance and potentially improving market valuation. IAC will not retain any ownership in ANGI post-spin-off, allowing both companies to operate independently and allocate resources tailored to their unique business needs.

Investment Thesis: Unlocking Value Through Diversification and Focus

The spin-off is expected to benefit both IAC and ANGI by allowing them to focus on their respective strengths. For IAC, the separation will enable the company to streamline its operations and concentrate on high-margin segments like Dotdash Meredith, which has demonstrated strong performance in digital advertising. The company has seen a 30% increase in programmatic advertising rates, driven by premium sectors such as beauty, technology, and pharmaceuticals. Innovative ad targeting technologies, such as the D/Cipher tool, have further enhanced advertising performance without relying on cookies, aligning with shifting consumer privacy standards.

Strategic partnerships, such as those with OpenAI and Apple News+, are expected to drive high-margin revenue streams through licensing and content integration. Additionally, IAC’s focus on care services, including Care.com, positions the company to capitalize on the growing demand for caregiving services, supported by demographic shifts and an aging population. The resilience of the caregiving sector, even amid economic challenges, underscores its potential to contribute significantly to IAC’s long-term growth.

Challenges Ahead: ANGI Faces Revenue Pressures and Operational Risks

While the spin-off presents opportunities for growth, ANGI faces significant challenges. The company has experienced a 15% year-over-year (YoY) decline in consolidated revenue, driven by weak performance in its U.S. Services segment. Homeowners are deferring non-essential home improvement projects due to macroeconomic pressures, including inflation, rising interest rates, and a slowdown in the housing market. This has directly impacted ANGI’s business model, which relies on connecting homeowners with service providers.

The Ads and Leads segment has also been affected, with a 10% YoY revenue decline as service providers reduce advertising budgets amid lower demand for their services. Additionally, ANGI is navigating the transition to a consumer choice model, influenced by Federal Communications Commission (FCC) regulations. The new model requires explicit consumer consent for marketing communications, creating short-term revenue volatility. While this model has the potential to enhance customer satisfaction and loyalty over time, it also introduces operational complexities and costs.

Valuation and Market Outlook: Positioning for Future Growth

IAC’s diversified portfolio and strong performance in digital advertising position it as a compelling investment opportunity. The company’s ability to unlock value through strategic spin-offs, combined with its focus on high-margin segments, supports a positive outlook. Analysts maintain a price target of $46.00 per share for IAC, revising the rating to HOLD from BUY amid share price volatility due to the special dividend and reverse stock split announcement.

ANGI, on the other hand, faces a more uncertain future. The company’s revenue challenges, combined with regulatory and competitive pressures, have led to a revised target price of $1.65 per share, with a HOLD rating. However, the elimination of the dual-class structure and the transition to a one-share/one-vote common stock are expected to enhance corporate governance and potentially improve market valuation. ANGI’s ability to navigate the current economic landscape and execute on its growth strategy will be critical in determining its long-term success.

Company Overview: IAC and ANGI Positioned for Independent Success

IAC Inc., founded in 1995 and headquartered in New York City, is a diversified holding company with a portfolio of category-leading businesses. The company operates through three main segments: Dotdash Meredith, Search, and Emerging & Other. Dotdash Meredith, a key subsidiary, has demonstrated strong performance in the digital advertising sector, driven by premium advertising rates and innovative technologies. IAC’s history of successful spin-offs underscores its ability to create value and focus on high-growth opportunities.

ANGI Inc., incorporated in 2017 and headquartered in Denver, Colorado, is a leading digital marketplace connecting consumers with home service professionals across approximately 500 categories. The company operates under well-known brands such as Angi, HomeAdvisor, and Handy, facilitating interactions between homeowners and service providers. Despite current challenges, ANGI’s position as a leading platform for home services provides a foundation for potential growth, particularly as the company gains greater independence and flexibility post-spin-off.

In conclusion, the spin-off of ANGI from IAC marks a strategic milestone for both companies, enabling them to focus on their respective strengths and pursue growth opportunities in a rapidly evolving digital landscape. While IAC is well-positioned to benefit from its diversified portfolio and high-margin segments, ANGI faces significant challenges that will require careful navigation to achieve long-term success.