After feeling the heat from disgruntled investors, Barry Diller has now succeeded at splitting IAC into five publicly traded companies. The parent IAC, until the spin, was an amalgamation of internet sites, cable networks, travel services, and mortgage lending. These groups had little in common (not a lot of 'synergies').
The split finalized today after nearly a year of paying high adviser (lawyers and bankers) fees.
The hope is that the svelter IAC will put the $1.3B in cash it extracted out of its other business to work.
However, Moody's slashed its corporate rating to junk due to "the significant reduction in IAC's scale and business diversity with the spin-off of approximately 78% of its revenue and approximately 73% of segment EBITDA." No matter. With a huge pile of cash and less side businesses to worry about, IAC just might fare well. Investors seem to think so: shares traded up over 8% today.
But what of the other four?
TicketMaster (TKTM) received very little detail in past IAC SEC filings. Independence will be great for a seemingly neglected company. Hopefully, the new company will fight Live Nation, a former customer (14% of revenue).
Tree.com (Lendingtree.com) is still an attractive site for consumers to shop for mortgage loans. Lack of company financials makes it too early to say.
HSN (Home Shopping Network): there are few things in today's economic environment that worry me more than strapped customers' willingness to sit and watch a channel (or surf the website) to buy blenders and gold-plated wrist watches.
ILG (Interval Leisure Group): this is a timeshare company. At just over 2x sales and with recurring revenue from gullible consumers, ILG's valuation looks decent.
The greatest joy is the absence of historical line-by-line economics, especially for the four subsidiaries. Bank analysts love to extrapolate these items into the future to justify their "target prices." Lack of such detail, coupled with forced selling (some institutions will have to sell shares of the smaller companies), and the relatively new entrepreneurial zeal of the new bosses, should create some potential buying opportunities. You won't see that on the Home Shopping Network.
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Disclosure: None
Image: http://aplasticcentral.com/images/then%20there%20were%205.jpg
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