Demand Media Soars on Report Deal to Go Private Dissolves
Demand Media Inc. (DMD), operator of
eHow.com and domain-name business eNom.com, rose to the highest
price since August after AllThingsD said the company had
discussed with Thomas H. Lee Partners a $1.2 billion deal to go
private that fell apart.
Demand Media soared 25 percent to $9.08 at 10:33 a.m. in
New York, after touching $9.51 for the highest level since Aug.
15. Shares of the Santa Monica, California-based company had
gained 9 percent this year in trading through April 27.
Demand Media would have been worth twice its April 27
market valuation of $608 million, according to the report. The
company may see large gains in its domain-name registration
business after an expansion of potential website addresses
announced by the Internet Corporation for Assigned Names
Numbers, said Douglas Arthur, an Evercore Partners Inc. (EVR) analyst
in New York.
“Private-equity firms have been very active in that
business,” said Arthur, who lowered his rating to the
equivalent of hold from the equivalent of buy, based on Thomas
H. Lee Partners reported bid of around $11 a share. Arthur
pegged a target price of $9.
AllThingsD, which didn’t identify its sources, said the
deal dissolved over complications related to financing and
executive retention.
Demand Media went public in January 2011 by selling 8.9
million shares at $17 apiece.
Kristin Moore, a Demand Media spokeswoman, declined to
comment in an e-mail, citing a quiet period ahead of the
company’s first-quarter earnings report due May 8.
To contact the reporter on this story:
Niamh Ring in New York at
nring@bloomberg.net
To contact the editor responsible for this story:
Anthony Palazzo at
apalazzo@bloomberg.net
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Article source: http://www.bloomberg.com/news/2012-04-30/demand-media-soars-on-report-deal-to-go-private-dissolves.html
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