UPDATE: Citigroup Downgrades Ancestry.com

Citigroup has published a research report on Ancestry.com

and has downgraded the company from Buy to Neutral. In the report, Citigroup wrote, "On Oct 22nd, ACOM and European private equity firm, Permira Funds, announced that a group of existing shareholders and Permira had agreed to acquire Ancestry.com for $32.00 per share in cash for $1.6B total. Key existing shareholders including ACOM's CEO Tim Sullivan & CFO Howard Hochhauser are planning to maintain a majority of their equity stakes in the company as part of the transaction, and Spectrum Equity will also remain an investor in the company. The transaction is expected to close in early 2013. The all-cash transaction represents a 41% premium over ACOM's closing price on 6/5/12, the last trading day prior to press reports that ACOM had retained a financial advisor in connection with a possible sale. The price also represents a 10% premium over the last traded price. Given that a sales process appears to have been ongoing for at least 4 months, we wouldn't anticipate a new bidder emerging at this point. And, at or around $32, we view ACOM's risk/reward as fairly balanced. Note that ACOM is up a sharp 37% YTD." Citigroup also lowered the price target from $35 to $32 on Ancestry.com, which is currently trading up $0.29 percent from Monday's $31.44 closing price.