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The Street Sees Match-IAC Split As Win-Win

Wayne Duggan

Match Group Inc (NASDAQ: MTCH) shares jumped 8.4% on Thursday after the company announced a deal to split from its parent company IAC/InterActiveCorp (NASDAQ: IAC). The separation deal has been approved by the boards of both companies. It will be tax free and is expected to be completed in the second quarter of 2020.

Several Wall Street analysts have weighed in on the split since the announcement.

Voices From The Street

Wells Fargo analyst Brian Fitzgerald said the terms of the deal are fair for both parties and Match should benefit from increased liquidity, strategic flexibility and index eligibility.

“We view MTCH as a best-in-class operator and manager of a strategically attractive portfolio of dating assets constructed to serve a broad array of use cases and consumer lifestages,” Fitzgerald wrote in a note.

Instinet analyst Mark Kelley said the deal will raise cash for IAC for future growth and allow them to focus on their current portfolio.

“For Match, we believe the clear benefit is enhanced liquidity and the elimination of its dual-class structure (which enables index eligibility and therefore creates the potential for new shareholder classes) while still allowing for strategic flexibility (including for M&A),” Kelley wrote.

Bank of America analyst Nat Schindler said the near-term fundamental focus for Match will be its Asia expansion and Tinder growth, and the stock remains a top mid-cap pick.

“We see the spin-off having little impact on MTCH fundamentals beyond upped interest expense, leverage and reduced share count,’ Schindler wrote.

See Also: Facebook Dating Vs. Match.com Vs. Tinder

Ratings And Price Targets

Wells Fargo has an Equal-Weight rating and no target for Match and an Overweight rating and no target for IAC.

Instinet has a Buy rating and $81 target for Match.

Bank of America has a Buy rating and $95 target for Match and a Buy rating and $321 target for IAC.

Benzinga’s Take

IAC now has pockets full of cash and Match is free to focus on a simplified path forward. Rarely are these types of deals a win for both parties involved, but the initial positive market reaction for both stocks suggests this deal is an exception.

Do you agree with this take? Email feedback@benzinga.com with your thoughts.

Latest Ratings for MTCH

Date Firm Action From To
Nov 2019 Maintains Neutral
Nov 2019 Maintains Equal-Weight
Nov 2019 Maintains Buy

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