It looks like they will be taken out by a private equity firm:
Ancestry.com Is Said to Be in Talks for a Buyout
By EVELYN M. RUSLI
DealBook
New York Times
July 24, 2012, 5:01 pm
After a brief run as a public company, Ancestry.com, the genealogy Web site, is closing in on a sale to take itself private.
The company, which has hired Qatalyst Partners to run its process, is in discussions with TPG Capital and Providence Equity Partners and Permira, according to people with knowledge of the matter, who spoke on the condition of anonymity because the talks are private. Though final bids are not due until early August, these people said, recent discussions have centered on prices in the mid-to-upper thirties. Shares of Ancestry.com fell 2 percent on Tuesday, to $27.23.
At that range, it will be valued at north of $1.5 billion, roughly triple its market value in 2009, the year it went public.
One of the people with knowledge of the matter noted that the company would report earnings on Wednesday, which is expected to be factored into upcoming price discussions. This person also noted that there is no certainty that a transaction will get done.
Ancestry.com would be going private at a time when many Internet companies are waiting in line to go public. Over the past year, a slew of Web start-ups have made their debuts, including Facebook, LinkedIn, Zynga and Groupon. But the results, so far, have been mixed. Under the harsh glare of the public markets, many of these companies’ stock prices have stumbled. Facebook, for instance, which is set to report earnings on Thursday, is trading at close to $28 per share, roughly 25 percent below its May offering price.
For Ancestry.com, going private will be a welcome reprieve.
Since hitting a high of $45 per share last year, the stock has been battered by concerns about its future growth and the cancellation of a high-profile television show, “Who Do You Think You Are,” which prominently featured the company’s research.
Started in 1996, the Ancestry.com Web site is part of the old guard of the Web (The company itself was founded in 1983.) The site, which helps users research and map their lineage, was created long before consumers thought about the Web in the context of social relationships. Unlike some of its younger peers, however, Ancestry.com is comfortably profitable. Last year, it generated $400 million in revenue and $62.9 million in net income — roughly double the previous year. It has more than 2 million paying subscribers, who pay $12.95 to $34.95 per month to use the service.
“The way it’s trading, people think it’s a no-grow,” said Raghavan Sarathy, an analyst with Dougherty & Company. “But there should be interest from private equity because they are generating copious cash.”
Still, despite its profits, the market has recently chilled on Ancestry.com, which is seen as a maturing Internet asset. The company briefly received a marketing boost from the NBC show “Who Do You Think You Are,” which followed celebrities as they dug up their family histories. But the network canceled the show in May. Bereft of its primetime platform, Ancestry.com may have to spend more of its precious cash to acquire subscribers. In the last quarter, the company’s subscriber acquisition cost – the average cost of acquiring new customers– was $88.11. It was lower than the prior quarter, but nearly 27 percent higher than the year-ago-period.
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