Shares of InfoSpace Inc. surged 31% to $17.38 Monday after the company agreed to sell Switchboard.com and other on-line directory assets to Idearc Inc. for $225M in cash. The sale, part of the company's ongoing restructuring, was expected to boost InfoSpace's cash balance above $400M; it plans to distribute the net proceeds from the sale to shareholders as a special dividend. "What we did here was pick an asset that really the market was not valuing at all and turned it into real cash," said InfoSpace CEO Jim Voelker. Idearc, the operator of Superpages.com and publisher of the Verizon Yellow Pages, will finance the deal with a mix of cash and borrowings under its existing revolving credit facility. Idearc expects the acquisition to be cash-flow accretive in the first year, to have no impact on its dividend policy and not have a material impact on its pro-forma leverage ratio. According to comScore's Media Matrix, Superpages.com's network had 21.3M unique visitors in August while InfoSpace Directories and Resources had 7.7M unique visitors. Completion of the deal is expected by year-end subject to, among other things, regulatory approvals.
Sources: Press release, Reuters
Commentary: InfoSpace's Slide Down • InfoSpace Agrees to Sandell Asset's Suggestions, Shares Lag on Guidance
Stocks/ETFs to watch: INSP, IAR. Competitors: GOOG, YHOO, LOOK. ETFs: HHH, FDN
Earnings call transcript: InfoSpace Q2 2007
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