Meredith Corporation (MDP) shares popped to over $58.28 per share after news that the company’s digital and magazine business is being acquired by Dotdash, the publishing arm of Barry Diller’s InterActiveCorp (IAC). What happens to Meredith shares after the Dotdash acquisition?
Under the $2.7 billion all-cash transaction, Meredith shareholders will receive $42.18 per share in cash. The transaction is expected to close by the end of 2021.
The acquisition will create one of the largest U.S. publishers.
Once the transaction closes, the combined company, Dotdash Meredith, is expected to be one of the largest publishers in the U.S. with publications in home, health, food, finance, parenting, beauty, and more. Dotdash CEO Neil Vogel will head up the new company.
Meredith’s National Media Group unit owns more than 40 magazines and digital publications brands, including Better Homes & Gardens, InStyle, PEOPLE, Allrecipes, and REAL SIMPLE. In 2018, Meredith bought Time Inc. for $2.8 billion.
Dotdash is one of the fastest growing online publishers with brands such as Investopedia, Verywell, Byrdie, The Spruce, and Simply Recipes. The digital publisher reaches about 100 million online consumers each month and has had 17 consecutive quarters of double-digit revenue growth, the company said in a statement.
"We've often found opportunities in the digital transformations of businesses and industries: travel, ticketing, dating, home services, and now publishing. Meredith is already seeing record digital growth and we think Dotdash can help accelerate that growth," said Joey Levin, CEO of IAC, in a statement. “We believe true and reliable content created by talented writers, editors, and photographers, backed by real brands, has a very bright future across all platforms. No one will do this better than Dotdash Meredith.”
Dotdash’s parent company, IAC, is also responsible for the brands Angi Inc. (which includes HomeAdvisor), Ask Media Group, and Care.com. The company has a history of building companies and then taking them public such as Match Group (MTCH) and Vimeo (VMEO), reports Reuters.
Dotdash expects to continue to grow digital assets.
The combined company is expected to grow its digital presence, with more than 70 percent of its 2021 pro forma adjusted EBITDA to come from online. By 2023, the adjusted EBITDA from digital assets is estimated to exceed $450 million.
"Our digital business is growing rapidly, having surpassed our magazine sales for the first time in the company's history," said Tom Harty, Meredith chairman and CEO. "The combination of Meredith's celebrated cross-platform brands, creative content and first-party data with Dotdash's digital-first brands is a game-changer for the industry. Nowhere else will you find such a premium portfolio of media assets under one roof. We are thrilled to join forces to accelerate Meredith's digital future."
Meredith sold its television business in June.
In June, the television side of Meredith’s business was sold to Gray Television, Inc. (GTN) for about $2.83 billion. The company’s portfolio included 20 television stations across the country, including the top markets such as Atlanta, Phoenix, St. Louis, and Portland. In that transaction, Meredith shareholders will receive $16.99 per share. It is also expected to close by the end of this year.