Angie's List responds to IAC's offer: no deal!

The company says IAC's $512 million offer "dramatically undervalues the Company"

Last week a deal was proposed that would have shaken up the local services space, when IAC offered to buy up local business review website Angie's List for more thn $500 million.

Angie's List said it would consider the offer, but on Tuesday it made its decision known: the company has decided to turn it down.

IAC had offered to acquire all of outstanding shares of Angie's Lists's common stock for $8.75 per share, a premium of greater than 50% over the unaffected price of Angie's List common stock. With 58.52 million shares, at that price the acquisition would be worth $512 million.

Angie's List seemed to somewhat insulted by the offer, however, saying that it "dramatically undervalues the Company and its long-term standalone prospects."

"The Board does not believe it is in the best interest of Angie’s List shareholders to rush to judgment and that doing so would be contrary to our fiduciary duties," Scott Durchslag, Angie’s List President and Chief Executive Officer, said in a statement.

"The Board believes that it should have the opportunity to fully evaluate our Profitable Growth Plan and should share that plan with shareholders before reaching a decision as to whether to engage in a transaction with IAC or any other party.”

The company also included a letter, written by Durchslag to Joey Levin, CEO of IAC/InterActiveCorp, in which he graciously rejected the proposal.

“We continue to believe that there is significant value embedded in the Company and that it is premature to conclude at this time that a strategic transaction is in the best interests of Angie’s List shareholders,” he wrote. “We appreciate your interest in Angie’s List and your recognition of our market-leading platform.”

If Angie's List had accepted, and IAC had gotten its hands on the company, it would have been combined with local home services marketplace HomeAdvisor, creating a company with over $700 million in revenue, $35 billion in gross transaction value and over an estimated 15 million unique visitors per month.

There is no indication as to what would have happened to the Angie's List brand, or any of its employees, if the transaction had gone through.

Interestingly, this was actually the second time that IAC had proposed a potential acquisition to Angie's List, as was revealed in the letter from Levin to the board when the second deal was revealed.

Durchslag has a positive outlook for Angie's List, but the is starting to face some stiff competition in the local services marketplace.

Of course there's always Yelp and Craigslist, but now it also has to deal with Amazon, which launched a professional services provider in March. Called Amazon Home Service, it launched with 700 services categories, including iPhone repair, yoga classes, car maintenance, TV wall-mounting, car battery installation and house cleaning.

The biggest threat to Angie's List, though, is probably Thumbtack, which now has over five million projects requested every year in over 1,000 categories. The company operates in all 50 states, and now has over 200,000 unique paying professionals. Thumbtack now generates $1 billion in revenue for independent small businesses every year and has have more paying pros on its site than both Angie’s List and Yelp combined.

It also just raised a $125 million funding round, giving it a $1.3 billion valuation.

Shares of Angie's list are up 1.12%, or $0.11, to $9.94, while shares of IAC have dropped slightly, 0.09%, down to $64.68 a share.

VatorNews has reached out to IAC for comment on this news. We wil update this story if we learn more.

(Image source: allthingsd.com)