Ancestry.com Sets $1.6 Billion Deal
By RYAN DEZEMBER
Wall Street Journal
October 22, 2012, 1:11 a.m. ET
Genealogy website Ancestry.com Inc. has agreed to be acquired by an investor group led by European private-equity firm Permira for about $1.6 billion, or $32 a share, according to people familiar with the deal.
The buyout is a bet that family-history research is more than a niche market and that the subscriber base can swell with technological innovations, deeper archives and a wider international audience. People familiar with the buyers' plans said that expansion in western Europe is a goal.
Ancestry.com has more than two million subscribers who pay $12.95 to $34.95 a month to access its content and use its online search tools, according to the company.
The $1.6 billion value of the deal accounts for vesting of outstanding options, the people said. The $32-a-share price represents a premium of about 40% from where the stock was trading in June before reports the company was on the block.
Several bidders looked at the company in an auction process, and trading this summer suggested the market expected a higher price. Shares hit a 52-week high of $33.47 on July 31 and traded above $32 for the next 2½ weeks. Friday, they closed down 1.7% at $29.18 but gained 2%, or 60 cents, in after-hours trading.
Ancestry.com reported no debt at the end of the second quarter but will carry just under $1 billion as a result of the take-private deal, according to a person familiar with the matter.
The predecessor to Provo, Utah-based Ancestry.com was founded in 1983. It turned its focus online about 15 years ago and has since digitized billions of historical records, from Australian election rolls to U.S. military records, which are available to subscribers looking to piece together family histories, according to company documents.
Ancestry.com has more than two million subscribers who pay $12.95 to $34.95 a month to access its content and use its online search tools, according to the company. Subscribers are predominantly in the U.S., with other core markets in the U.K., Canada and Australia.
In addition to Permira, the buyout group includes the private-equity firm's co-investors; members of Ancestry.com's management, including Chief Executive Tim Sullivan and Chief Financial Officer Howard Hochhauser; and Spectrum Equity, which owns about 30% of Ancestry.com.
Spectrum first invested in Ancestry.com in 2007, eventually becoming its majority owner and helping to take it public at $13.50 a share in a well-received November 2009 initial public offering. Shares reached a peak of $45.70 in April 2011.
Subscribership grew in 2010 with the U.S. launch of Ancestry.com's television show "Who Do You Think You Are?" on NBC. After three seasons the network earlier this year declined to renew the deal. The company has said it is looking for a new network for the show, which features celebrities delving into their lineage. A separate version of the show bowed in the U.K. on the BBC in 2006 and still airs.
In recent weeks Ancestry.com has continued its own deal-making aimed at building its database. It acquired family history website Archives.com for about $100 million in August, and earlier this month it said it would buy 1000memories Inc., a San Francisco company that helps users digitize family photos, for an undisclosed price.
Ancestry.com is scheduled to release third-quarter results on Wednesday after market hours. It told shareholders in July that it expects full-year revenue of about $475 million and profits that are about a third of that.
Write to Ryan Dezember at ryan.dezember@dowjones.com
A version of this article appeared October 22, 2012, on page B2 in the U.S. edition of The Wall Street Journal, with the headline: Ancestry.com Sets $1.6 Billion Deal.
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