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Demand Media®
today announced that its board of directors has
authorized a plan to explore separating its business into two independent,
publicly-traded companies:
* A pure-play media company with a powerful outsourced content creation
platform that organically grows its audience, leading web properties that
reach over 100 million monthly unique visitors, and an integrated
monetization platform that incorporates branded, network and mobile
revenue streams; and
* A pure-play domain services company that would be the only end-to-end
provider offering registry services, expansive wholesale and retail
distribution, and comprehensive aftermarket services.
“Both businesses have grown to become leaders in their respective markets, and
we now want to provide additional operational and strategic flexibility to
drive sustainable growth,” said Richard Rosenblatt, Chairman and CEO, Demand
Media. “We believe a separation will position each business to better pursue
its specific strategic priorities and vision, as well as improve transparency
for investors and enable the capital markets to better assess each company's
value, performance and potential.”
Rosenblatt added: “We intend to appropriately capitalize both companies to
pursue their distinct growth opportunities, such as the upcoming launch of new
generic Top Level Domains that is a transformative event for our domain
services business, as well as further diversifying our content offerings in
our media business.”
Demand Media anticipates that the potential transaction will be in the form of
a tax-free distribution to U.S. stockholders of new publicly traded stock in
the domain services company. The Company expects that the completion of this
transaction could take place in the next nine to twelve months. Executing this
transaction requires further work on structure, management, governance, and
other significant matters. Over the next several months, Demand Media's
management, working with outside advisers, intends to develop detailed plans
for the board's further consideration and approval.
This transaction is subject to a number of conditions, including final
approval of the transaction by Demand Media's board, favorable tax rulings and
opinions regarding the tax-free nature of the transaction to Demand Media and
to its stockholders, further due diligence as appropriate, and the
effectiveness of required filings with the Securities and Exchange Commission
(“SEC”). There can be no assurance that the separation of Demand Media's
business as described in this announcement will occur.
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