Sunday, 14 November 2010

ACOM (Ancestry) first anniversary and stock offer

ACOM, the stock of Ancestry.com, has now been listed for trading for one year. From an issue price of $13.50 it has risen to close on Friday at $26.49, a 96% increase. It traded as low as $12.80 and up to a recent high of $28.38.It now has a market capitalization of $1.18B

Compared to ACOM the performance  of the stock of Google looks anemic.

On Friday Ancestry announced it will be making a secondary offering of 3,795,955 shares of common stock at a price of $26.00 per share.  These are not new shares.
"... certain of the Company's stockholders intend to offer 3,564,842 shares of common stock for sale and grant the underwriters the right to purchase up to 534,726 additional shares, solely to cover over-allotments, if any. Ancestry.com is not selling any shares of common stock in the offering and will receive no proceeds from the sale. The secondary offering will not result in dilution of shares currently outstanding. Ancestry.com expects to incur non-recurring professional fees and costs of approximately $1 million in connection with this offering, which will negatively affect the company's adjusted EBITDA for the quarter and full year ending December 31, 2010."
This suggests to me that a major shareholder sees the major gains in the stock to have occurred and that they can best use their funds elsewhere.

On the other hand, website Motley Fool, sees Ancestry as a potential takeover target for Google.
"Subscription revenue for an online service would be welcome at Google, and if there's a free ad-based model to be had, there's no one better than Google to make it happen."

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