agreed to buy
the online marketplace for babysitters and other caregivers, for about $500 million in cash.
The deal comes months after a Wall Street Journal investigation earlier this year showed that Care.com provided limited vetting of its caregivers, sometimes with tragic results. The investigation led to the company overhauling its screening practices, weighed on its stock price, contributed to the chief executive resigning and prompted an activist investor to urge the company to pursue a sale.
IAC said the move is aimed at getting the company into the family-care business. It expects to close the transaction in the first quarter of 2020.
“IAC is committed to operating marketplace businesses that put safety first and understands the investments that need to be made to do so,” IAC said. The company said it doesn’t expect to record operating profit during its first year of owning Care.com.
The deal represents a 34% premium to Care.com’s stock on Oct. 25, a day before a media report on the potential sale was published, the company said Friday.
Shares of Care.com rose 13% in morning trading. The stock, which hit a high of $25.81 in March, has fallen about 22% this year. The company’s stock had quadrupled in three years as revenue surged before the Journal’s investigation. IAC shares added 1.2% to 241.22.
The companies said they plan to name IAC executive Tim Allen as Care.com’s chief executive, succeeding
Sheila Lirio Marcelo.
Ms. Marcelo, Care.com’s founder and chief executive, said in August that she would resign as CEO.
After Ms. Marcelo said she was leaving her post, the activist hedge fund Engine Capital LP urged Care.com to pursue a sale, saying the company is “at a crossroads.”
The Journal’s investigation in March found instances in which caregivers hired through the Care.com platform had police records and were accused of committing crimes while caring for clients, including child abuse, sexual assault and murder.
The company has taken steps to address those issues, and in May said it would overhaul its business model to include in-depth background checks and other screening procedures for caregivers.
The Waltham, Mass., company counts about 35 million families and caregivers in more than 20 countries as users of its services.
IAC, which operates media platforms Dotdash and Vimeo, on Thursday said it has agreed to fully separate dating-services provider
Match Group Inc.
from IAC’s remaining businesses.
Write to Dave Sebastian at [email protected]
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