TheKnot, the wedding and lifestyle online media firm, which had been waging a long and costly litigation battle (Knot’s last year expenses: about $7 million...probably around the same ballpark for WC) with rival WeddingChannel.com, has done the next best thing: bury the hatchet and buy the smaller rival. The price: about $57.9 million in cash and 1.15 million common shares. Based on Knot’s closing share price of $17.76 today, the total value of the deal would be about $78.3 million.
Knot plans to finance the cash portion through a follow-on common stock offering it expects to file next month. If the follow-on offering isn’t completed, it will instead pay $28 million in cash and issue 3.2 million common shares for all of the capital stock and stock options of WeddingChannel.com. The company will adjust the cash portion of the purchase price if WeddingChannel.com’s working capital is more or less than $10 million at closing.
The deal has been approved by both boards, and shareholders representing about 30 percent of WeddingChannel.com’s stock have agreed to vote in favor of the sale.
The release does not mention anything about the litigation between the two companies, but I assume that was solved as well...the two parties had a legal stay in January. The Knot has been embroiled in a patent dispute with WeddingChannel.com since Sept. 2003, when WC alleged the Knot violated its patents for gift registries.
For Q1, Knot had profits of $1.7 million, versus a prior-year profit of $409,000. Revenues rose 24 percent to $14.8 million from $11.9 million in the year earlier period...
More details in the release here.