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Buyout talk for Utah's Ancestry.com intensifies, reports say

Published July 27, 2012 11:25 pm

Deal • Suitors, deadlines surface same week as Provo company posts robust results.
This is an archived article that was published on sltrib.com in 2012, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Final bids are due next month from potential buyers for Provo-based Ancestry.com, published reports say.

The company that provides online family research tools and databases declined comment on speculation that it is discussing a possible buyout with several private equity firms.

The New York Times, citing sources that it did not identify, reported earlier this week that the publicly traded company is in talks with TPG Capital, Providence Equity Partners and Permira on a possible sale.

"The way it's trading, people think it's a no-grow," Raghavan Sarathy, an analyst with Dougherty & Co., told the Times. "But there should be interest from private equity because they are generating copious cash."

The reports came as the company announced earlier this week that second quarter revenue rose 18 percent, to $119.1 million. Per-share profit also rose to 44 cents.

On Friday, the company's shares closed up 72 cents to finish at $33.07 on the Nasdaq exchange. Analysts have suggested Ancestry.com could fetch more than $35 per share, Reuters reported.

Ancestry.com has been working with Frank Quattrone's Qatalyst Partners LLC to find buyers, Bloomberg News reported last month. It already has taken first offers, Reuters said, which also did not identify its sources.

Ancestry.com CEO Tim Sullivan was asked during a conference call Wednesday about whether he could comment on a possible sale.

"No, we read the newspapers, also," Sullivan said. "We've seen them. I think we obviously just never would be commenting on anything like that."

Representatives for TPG, Permira and Providence each declined comment.

With stable revenue and relatively lower valuation, Ancestry.com was "attractively priced," Bank of America Corp. analysts said last month in a research report.

Ancestry.com was founded in 1983 as a publisher of genealogical books and magazines. In 1996, it became one of the first companies that recognized the power of the World Wide Web and moved operations to its website.

Private equity firm Spectrum Equity Investors LP acquired a majority stake in the parent company that runs Ancestry.com and other sites for $300 million in 2007. It took Ancestry.com public two years later in a $100 million offering.

A spokesman for Spectrum, which owned about 31 percent of Ancestry.com as of the end of March, declined to comment, Reuters said.

The company, which reported having a workforce of nearly 1,000 at the end of 2011, has more than 2 million subscribers who pay $12.95 to $34.95 a month to use its services.

The company lost almost a third of its market value earlier this year amid concerns that the cancellation of a television show featuring its genealogy research would crimp subscriber growth. "Who Do You Think You Are?" showed celebrities such as Martin Sheen and Marisa Tomei exploring their roots with the help of Ancestry.com research and gave the service more exposure. The final episode aired on May 18 on NBC.