Analysts: Match Spinoff Should Be Good For IAC

Sell-side analysts like the prospects for IAC/InterActiveCorp IAC if it sheds subsidiary Match Group Inc. MTCH.

IAC said Friday it is proposing to spin off its interest in Match, which owns several online dating sites, including Match.com and Tinder, to IAC shareholders.

New Match would be responsible for certain liabilities and assets of IAC under the proposal, which is subject to approval of the IAC board and shareholders.

The Analysts

Bank of America Merrill Lynch analyst Nat Schindler reiterated a Buy rating on IAC and raised the price target from $340 to $365.

Wells Fargo’s Brian Fitzgerald has an Outperform rating on IAC and a Market Perform rating on Match Group.

The Takeaways

IAC, which telegraphed the idea of a split back in August, could meaningfully reduce the conglomerate discount in IAC’s stock price, Schindler said in a Monday note.

The reshuffling of corporate debt to Match could also increase IAC’s net cash position from $1.35 billion to as much as $3 billion, the analyst said. 

Wells Fargo’s Fitzgerald said the proposed transaction's impact on Match shares is uncertain, noting the proposal includes a pre-split debt financing arrangement and special dividend by Match.

“IAC shares remain our preferred play on the situation,” the analyst said, given the valuation discount on assets after the split implied by current trading valuations.

Match Group, which went public in 2015, reported about 9 million subscribers across various dating platforms in its latest quarter.

IAC also indicated in August that it is considering spinning off another publicly traded subsidiary, ANGI Homeservices, Inc. ANGI, but now said it will deal with Match first before considering whether to move forward on shedding ANGI, which is the holding company for Angie's List.

Price Action

IAC shares were up 0.91% at $228.58 at the time of publication, while Match Group shares were up 0.99% at $74.73. 

Related Links:

IAC CEO Says Match Group Can 'Stand On Its Own'

Nomura Bullish On InterActiveCorp, Cautious On ANGI Homeservices After Quarterly Reports 

Photo courtesy of Tinder.