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IAC's Dotdash Buying Meredith in $2.7 Billion Deal

Publisher of People, Better Homes & Gardens joins digital operator controlled by Barry Diller.
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IAC/InterActive's  (IAC) - Get Free Report digital media unit, Dotdash, will acquire Meredith Corp.  (MDP) - Get Free Report in an all-cash transaction for $42.18 a share, the companies announced Wednesday after the market close.

The $2.7 billion deal will combine Barry Diller-controller IAC with Meredith, a magazine publisher whose titles include People, Better Homes & Gardens and Southern Living.

Word of talks between the two companies first surfaced in late September.

The combined company will be called Dotdash Meredith and will be led by Dotdash CEO Neil Vogel, the companies said in a statement.

"We've often found opportunities in the digital transformations of businesses and industries: travel, ticketing, dating, home services, and now publishing,” said said Joey Levin, CEO of IAC, in the statement. “Meredith is already seeing record digital growth and we think Dotdash can help accelerate that growth."

In after-hours trading Wednesday, shares of Meredith rose $3.45, or 6%, to $58 a share.

Earlier this year, Meredith agreed to sell its television station business to Gray Television  (GTN) - Get Free Report, which provides for a payment of $16.99 per share to Meredith shareholders upon completion.

The Meredith acquisition will be funded by IAC using cash on hand and newly incurred debt, according to the statement. The deal is subject to customary closing conditions, including regulatory approvals. 

“The transaction has been unanimously approved by the boards of directors of both IAC and Meredith Corporation and is not conditioned on an IAC or Meredith Corporation shareholder vote,” the companies said in the statement.

IAC Interactive shares rose $5.62, or 4.3%, to $137.30 in after-hours trading.