One day after outlining plans to spin off all its Match Group shares, digital brand holding company IAC says it has agreed to purchase Care.com in an arrangement valued at almost $500 million. IAC will pay $15 for each share of Care.com in a transaction that is all cash, which marks a 13.2 percent premium over where Care.com’s shares finished the day on Thursday at $13.25, CNBC reported.
Care.com shares, however, dropped earlier in 2019 from record highs of almost $26 each in March following the questioning of the marketplace’s caregiver vetting process by a Wall Street Journal investigation. Shelia Lirio Marcelo, the firm’s founder, stepped down as chief executive in August. Activist investor Engine Capital then advocated for Care.com to look for a sale.
IAC executive Tim Allen will become Care.com’s CEO as part of the arrangement with IAC. Marcelo said in a statement, as reported by CNBC, “Since our founding 13 years ago, we’ve delivered on our mission to help millions of people find affordable, high-quality care and caregivers find meaningful work.” Care.com claims it had over 1.5 million successful matches since its 2006 start — and 374,000 paying families as of 2019’s third quarter.
IAC Chief Executive Officer Joey Levin said in a CNBC interview that Care.com has made much progress on safety as of March. But he said, “Safety is going to be a top priority for us. It is on all of our platforms.” He also noted, “[You] got to do things like background checks, and you got to give tools to both sides of the marketplace to make sure people are safe.”
Reports surfaced in April that Care.com had removed over 46,000 daycare center listings from its website ahead of a Wall Street Journal investigation into its practices. Care.com reportedly took down approximately 72 percent of daycare centers listed on the website. The scrub amounted to the removal of 46,594 businesses.