In a move that could shake up the financial services industry, Bankrate announced earlier this week that it agreed to be acquired by Red Ventures, which bills itself as a “digital consumer choice platform,” in a deal that values Bankrate at $1.4 billion.
According to the companies, Red Ventures will acquire Bankrate, the publisher, aggregator, and distributor of personal finance content and lead generator for the financial services industry, in an all-cash transaction.
Under the terms of the agreement, Bankrate shareholders will receive $14 per share in cash, which represents a premium of approximately 31% over Bankrate's three-month average closing share price.
That places the total purchase price for Bankrate at approximately $1.24 billion.
In a release, the companies said that the deal is mutually beneficial and will allow both companies to grow.
Bankrate’s operations touch personal finance categories, including credit cards, banking and senior care, while Red Ventures works with brands in the financial services, home services and healthcare industries.
And the companies feel that combining the two companies will be complementary.
“We're excited to join forces with the Bankrate team, which has built an impressive and powerful platform of consumer-facing financial services content and brands,” Ric Elias, CEO of Red Ventures, said.
“Our capabilities are highly complementary,” Elias continued. “We see significant potential to leverage our technology, strategic partnerships and digital expertise and build on Bankrate's leading platforms to help more consumers find the financial services and products that meet their needs.”
Bankrate currently operates several different brands, including its flagship sites: CreditCards.com, Bankrate.com, and Caring.com.
On Bankrate.com, for example, consumers can get financial advice about a variety of financial products including mortgages, credit cards, auto loans, banking, and personal loans.
Consumers can also compare financial products (like mortgage rates, for example) to one another.
Listings and products from various companies, which pay for the leads they receive from Bankrate, populate those comparison pages.
Each comparison page carries the following “advertising disclosure”: The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where and in what order products appear. This table does not include all companies or all available products. Bankrate does not endorse or recommend any companies.
The company also owns and operates other specialist sites, apps and social platforms, including NextAdvisor.com, The Points Guy, Interest.com, Quizzle.com and Walla.by.
“We are thrilled to have reached an agreement that delivers immediate and significant value to our shareholders while joining with Red Ventures, a world-class organization that will take the Bankrate businesses to the next level of success,” Kenneth Esterow, president and CEO of Bankrate, said in a release. “As a part of Red Ventures, Bankrate will be better positioned than ever to be the partner of choice for providers to acquire customers.”
In a related filing with the Securities and Exchange Commission, Bankrate revealed more detail on why it chose to sell to Red Ventures.
The SEC filing includes a copy of an announcement issued by Bankrate to all of its employees on Monday, when the deal was announced.
“This transaction delivers immediate and significant value to our shareholders, and management and our Board of Directors believe this strategic combination is in the best long-term interests of our shareholders as well as our other constituencies,” the letter states.
“There’s a ton of complementarity between our two businesses. Both Bankrate and Red Ventures look to be the most efficient source to acquire customers for our provider partners,” the letter continues.
”Bankrate does so primarily by providing a broad and deep personal finance and care marketplaces of providers. We serve consumers by providing comprehensive, objective and expert information for consumers to make informed decisions to maximize their money,” the letter adds. “Red Ventures does it primarily through direct customer acquisition through digital channels on behalf of their provider partners – they essentially become the digital brand of their partners.”
And now, the deal will help both companies accelerate their growth.
“Combining with Red Ventures puts all of the Bankrate businesses on a bigger field with more resources,” the company’s letter states.
“Also, being part of a larger, more diverse enterprise will empower Bankrate to take bigger swings at our opportunities, and invest more consistently over longer periods of time to compete at a much higher level,” the letter continues. “For you, as part of a larger growth company, there will be more opportunities for personal growth and career advancement.”
The letter also states that both companies will continue to operate as independent after the deal is completed.
“Once the transaction closes, which is expected to occur in the second half of 2017, as Red Ventures and Bankrate management teams begin working together to identify how to best capture these terrific growth opportunities, we’ll keep you updated on plans for the combined company,” the letter states.”
“But to be clear, there are no plans to move where Bankrate’s businesses are operating or make wholesale changes to Bankrate’s business models,” the letter adds. “Until the transaction closes, it is absolutely business as usual.”
As stated above, the companies expect the deal to close later this year.