This valuation represents a 34% premium to Care.com's unaffected closing stock price on October 25, 2019, the last trading day before a media report was published speculating about a potential sale process.
With more than 1.5 million successful matches made since its inception and 374,000 paying families as of Q3 2019, Care.com is the leading global platform for matching families with caregivers in the rapidly growing but highly fragmented market for family care, sized in excess of $300 billion in the US alone. With this acquisition, IAC will gain a foothold in a market new to the company with natural, secular tailwinds. Following a proven playbook used to grow other marketplaces, IAC will invest to accelerate Care.com's growth across its core categories (child and senior care) with the opportunity to further extend its platform into adjacent areas, such as pet and home care.
"Family care is exciting new territory for us—and an accelerating market as demand for both child and senior care intensifies worldwide," said Joey Levin, CEO, IAC. "The Care.com team has built a trusted brand and marketplace for families all over the world. We like marketplace businesses and this is one in a category we think has incredible potential."
As part of the agreement, IAC and Care.com also announced plans to appoint long-time IAC executive Tim Allen to Chief Executive Officer of Care.com, effective upon closing. Mr. Allen succeeds Founder, Chairwoman and CEO, Sheila Lirio Marcelo, who announced plans to transition from the CEO position earlier this year.
"I'm both thrilled and honored at the opportunity to lead Care.com at this very pivotal moment for the company," said Mr. Allen. "Care.com is the go-to brand making it easier for millions of families to connect with affordable, accessible care – I'm excited to start its next chapter as an IAC company."
Ms. Marcelo said, "Since our founding 13 years ago, we've delivered on our mission to help millions of people find affordable, high-quality care and caregivers find meaningful work. Now, we're bringing together the world's largest marketplace for care with the leader in scaling and growing marketplace businesses. We are excited to work with Tim and IAC's leadership and believe this transaction will deliver value to all our stakeholders."
As part of IAC, Care.com will benefit from IAC's history of building scaled marketplace businesses in verticals such as travel, dating and home services. In particular, IAC is focused on growth in the following areas:
Given the multiple untapped growth opportunities within Care.com's business combined with a number of transaction adjustments, the company will focus on investing to accelerate Care.com's leadership position and doesn't expect to deliver positive operating profit during the first year of ownership.
The transaction is expected to close in the first quarter of 2020.
SOURCE IAC and Care.com
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