Might 23 (Reuters) – Activist investor TCS Capital Administration on Tuesday urged Yelp Inc (YELP.N) to both discover a sale or a merger with online-services firm Angi Inc (ANGI.O), sending shares of the service-recommendation website 10% greater in premarket buying and selling.
Yelp is “shockingly undervalued” and could possibly be offered for greater than twice its share value, mentioned TCS Capital, one of many firm’s largest traders with a stake of over 4%.
Yelp’s market valuation stood at about $2.1 billion, about $500 million greater than Angi’s, as of final shut.
TCS Capital founder Eric Semler mentioned a merger with Angi, previously often called Angie’s Record, might create a significant participant within the $500 billion residence companies market.
Yelp and Angi compete within the on-line residence companies market, serving to clients with repairs and renovations and different residence care wants. Yelp additionally offers a platform for person opinions on native companies from eating places and dentists to mechanics.
“As a former board member and longtime investor in ANGI, I imagine {that a} Yelp and ANGI mixture would yield monumental income synergies and price financial savings that would finally double the worth of Yelp’s shares,” Semler mentioned.
Angi didn’t instantly reply to a Reuters’ request for remark, whereas a Yelp spokesperson mentioned the corporate “maintains an energetic dialogue with our shareholders and values constructive suggestions on our enterprise and methods to create worth.”
Shares of Yelp have been up at $35.70 earlier than the bell. They’ve risen 47% since going public in early 2012, whereas the benchmark S&P 500 index (.SPX) has greater than tripled within the interval.
The corporate is witnessing sturdy demand for its promoting merchandise at a time when companies are slicing again on advertising, with income rising 13% within the final reported quarter and Yelp elevating its full-year web income outlook.
Reporting by Samrhitha Arunasalam in Bengaluru; Modifying by Rashmi Aich
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