Match Group’s $560 Million Dividend May Power IAC Acquisition

In November, Match Group announced the decision to pay out $560 million in a ‘special dividend’, much to the bemusement of analysts at The Motley Fool.

The move had the potential to rock Match Group’s finances, with the company already some $800 million in debt.

A Jefferies analyst, Brent Thill, now argues that the dividend was likely a way to help umbrella IAC stockpile cash. The company owns 80% of Match, and so took $440 million from the transaction.

IAC’s strategy may be to gear up for a high profile acquisition. Thill notes that CEO Joey Levin has recently talked about having the capacity to “digest” a $5 billion deal.

Sales growth at IAC is expected to slow next year, from 28% in 2018 to 14% in 2019. The attendant dip in revenue may have motivated the dividend.

Match Group stock now faces two strong headwinds in the arrival of Facebook Dating and Bumble’s potential to IPO. This shock to the market leader’s cash reserves may make investors doubly wary.

Early signs are that Match has benefited from the acquisition of Hinge, however, with downloads of that brand rising 500% year-on-year.

Owning the “anti-Tinder” has allowed for a degree of product differentiation – Tinder has now been repositioned (slightly) as a space to embrace the single life.

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