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Meredith Stock Surges on Report of $2.5 Billion IAC Buyout Talks

Meredith soars on a report that it is in acquisition talks with IAC/InterActive Corp.

Meredith  (MDP) - Get Meredith Corporation Report, owner of such titles as People magazine, Travel + Leisure, and Better Homes and Gardens, surged to its highest level in two years Friday following a report that it was in advanced talks to be acquired by Barry Diller's IAC/InterActiveCorp.  (IAC) - Get IAC/InterActiveCorp. Report in deal valued at more than $2.5 billion.

At last check shares of the Des Moines, Iowa, media giant were 25% ahead to $56.13, while New York-based IAC was up 4.4% to $139.63.

IAC, led by Chairman Barry Diller, has pulled ahead of another group vying for Meredith that includes Phoenix private-equity firm Najafi Cos. and could strike a deal in the coming days, The Wall Street Journal reported, citing people familiar with the matter. 

There is no guarantee there will be a deal, the Journal said, as the talks could still fall apart.

Both companies declined to comment.

“In our view, IAC is mainly focused on Meredith’s digital media assets,” which would complement IAC’s Dotdash online publishing business, Cowen analyst John Blackledge said in a research note Friday. "The deal would add significant scale to IAC's already strong Digital media biz."

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Blackledge, who has an outperform rating and a $180 price target on IAC, said that the magazine segment generated an additional $1.3 billion in revenue, "making it a considerable portion of the potential acquisition."

Meredith’s digital business generated about $700 million in revenue for the 12 months ended in the second quarter of 2021. Meredith’s magazine segment generated $1.3 billion in revenue. Dotdash generated revenue of $264 million over the same period.

"We also believe that Dotdash's continuing efforts to improve direct relationships with advertisers to sell premium inventory may be enhanced by adding Meredith's assets," the analyst said.

In turn, Blackledge said, "Dotdash has implemented what we view as a best-in-class-approach to open-internet monetization of inventory, relying on slimmed-down ad loads and improved page speed to generate organic traffic. [Thus] there may be potential for revenue synergies at Meredith by implementing aspects of Dotdash's playbook."

Meredith recently sold off its TV operations. A sale of the magazine business would mark a turnabout for Meredith, which bought Time Inc. several years ago.

IAC spun off its Match.com and Vimeo businesses. The company has several online publications, including Brides, Serious Eats and TripSavvy.