The Deal: Active Network Considers 'Expressions Of Interest'

NEW YORK ( TheStreet) --Shares of Active Network ( ACTV) surged 24.33% to $10.33 on Friday, following news the event and activity management company is officially on the block, upon receiving inquiries from unnamed third parties.

As it noted in its second-quarter earnings announcement on Aug. 1, Active said it has created a committee to explore strategic alternatives.

Citigroup has been retained to serve as financial advisor throughout the process.

"The company has received a number of expressions of interest from outside parties, ranging from an investment in Active Network to an acquisition of the company," Jon Belmonte, interim CEO of Active, said in the company's earnings call. "The Strategic Transactions Committee and the entire Board of Directors intend to evaluate all options carefully in order to maximize shareholder value, including the continued execution of its stand-alone plan," Belmonte said in a statement.

The San Diego-based company's cloud-based technologies offer processing and management services for events, conferences, and other settings including campgrounds and golf clubs.

Though Active is the largest company in the event management space, its competition includes Seventy Event Media Group and Eventbrite.

Active has entered a number of markets over the past few years through acquisitions, Sequin said. Rather than trying to win over a competitor's customers, Active's found it more cost effective to simply buy certain companies, he said. For instance, on Jan. 5, 2012, Active acquired corporate meeting manager StarCite for almost $58 million in cash and stock. It purchased online church management software provider Fellowship Technologies, on Feb. 8, 2011, for undisclosed terms.

Active, which said a third-party transaction coming out of its review was not guaranteed, declined to comment further.

The company posted a second-quarter loss of $4.5 million on revenue of $119.5 million, as compared to a $2.3 million loss $108.2 in revenue for the same time the year before.

Andre Sequin, research analyst at RBC Capital Markets, said the three most likely outcomes of the review include a take-private deal, a strategic investment by a partner, or a buyout of the company.

An outright sale of the company would be a good move, Sequin said, "if the price is right."

But, he added, "I have a hard time figuring out who the potential acquirer would be; where Active would fit into a larger company."

With the latest rise in shares, Active Network has climbed almost 96% year to date, climbing to a $641.5 million market cap.

"Despite the fact they took revenue guidance down, EBITDA (earnings before interest, taxes, depreciation and amortization) did come up, and we've basically been waiting for that since the time of the IPO," Sequin said, referring to the company's Aug. 1 quarterly announcement. "And, with their confirmation of some rumors around a potential takeout, that's going to lend some support to shares."

After going public on May 25, 2011, Active has struggled primarily within its sales department which has seen various changes among its management, Sequin said.

However, on Aug. 1, the company lifted its full-year adjusted EBITDA guidance to a range of between $51 million and $54 million, partly due to an expected reduction in operational costs of about $12 million.

" Active is seemingly starting to turn around and starting to improve," Sequin said.

"With an EBITDA growth rate close to 30% over the next two years, that leaves room for multiple expansion."

--Written by Sarah Pringle in New York--

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