IAC’s Dotdash to Snap Up Meredith’s National Media Group

New York-based Internet media firm InterActive (IAC) and Iowa-based media and marketing company Meredith Corp. (MDP) have signed an agreement under which IAC’s digital publishing unit Dotdash will acquire Meredith’s National Media Group in an all-cash transaction of $42.18 per share.

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National Media Group consists of Meredith’s corporate operations and its Digital and Magazine businesses. The combined company, which will be led by Dotdash CEO Neil Vogel, will be called Dotdash Meredith. (See IAC stock chart on TipRanks)

The acquisition is expected to close by the end of 2021. Meredith’s shares closed 6.5% higher on Thursday. The stock gained another 0.2% in extended trade to end the day at $58.19. Meanwhile, IAC’s shares closed 7.8% up but lost 1.4% in after-hours trade. (See Meredith stock chart on TipRanks)

The CEO of IAC, Joey Levin, said, “Meredith is already seeing record digital growth and we think Dotdash can help accelerate that growth…Together we can offer uniquely engaged audiences to advertisers and partners—based not on reliance on private information or personal history but on relevancy to the content they’re consuming and a deep understanding of their needs.”

The Chairman and CEO of Meredith, Tom Harty, said, “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.”

The transaction is likely to expand Dotdash’s monthly online customer base to 175 million. Furthermore, the combined company projects adjusted EBITDA from digital assets to surpass $450 million in 2023.

Following the announcement, Jefferies (JEF) analyst Brent Thill reiterated a Buy rating on IAC with a price target of $160 (12.7% upside potential).

The analyst said, “We believe Dotdash’s digital expertise will help Meredith to accelerate its digital transformation as the asset gets integrated and benefits from Dotdash’s rich digital experience and strong advertiser base.”

Overall, the stock has a Strong Buy consensus rating based on 11 Buys and 1 Hold. The average IAC price target of $172.82 implies 21.8% upside potential. Shares have gained nearly 82% over the past year.

Two months ago, Benchmark Co. analyst Daniel Kurnos maintained a Buy rating on Meredith and raised the price target to $58 from $43. The analyst believes the Street’s EBITDA forecast for National Media Group is too low.

Overall, the stock has a Moderate Buy consensus rating based on 2 Buys. The average Meredith price target of $56 implies 3.6% downside potential. Shares have gained 341.2% over the past year.

According to TipRanks’ Smart Score rating system, Meredith scores a “Perfect 10,” suggesting that the stock is likely to outperform market averages.