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IAC/Interactive: Divided We Stand

Interactive Corp. (NASDAQ: IACI) recently announced its decision to split its whole business into five separate, listed entities. The stock lost around 24% in 2007.

The spin-off will hopefully lead to value unlocking for shareholders. It will create 5 different entities - Interactive (including, and Citysearch), Home Shopping Network, Ticketmaster, Interval (Time share and Travel) and Lending Tree (Real Estate mortgage).

The breaking up will create a simple structure and allow investors to invest in individual business segments with transparent metrics. It will also allow the individual business segments to be nimble and pursue their own specific M&A activities. The transaction is expected to be completed by 2Q/3Q 2008.


Of the five entities, LendingTree would be the worst-performing business, and IAC and Ticketmaster would likely be the strongest.

There are rumors of IAC acquiring Flixster for $150 – 200 million. Flixster raised $2 million in funding from Lightspeed Ventures and other angel investors in February 2007. The site had 8.2 million visitors, and 139 million page views in November 2007. The social network could be easily integrated into the Company’s Ticketmaster business.

Currently the IAC/Interactive stock is trading at $24, which is close to its 52-week low. It is a reasonable bet to say that the restructuring will provide good shareholder returns, and a nice turnaround for the company.
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