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LendingTree (TREE) Acquires for $370.2M

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Recently, LendingTree, Inc. (TREE - Free Report) completed the acquisition of, LLC, one of the largest online insurance comparison marketplaces. Notably, this October, in an effort to diversify its product portfolio and expand in the insurance industry, the former entered into the deal to acquire the latter.

Per the agreement, the total equity purchase consideration is $370.2 million. Of this, $300 million is likely to be paid in cash at closing, along with contingent payments of up to $70.2 million. This is subject to the achievement of some growth targets of the company for more than three years.

Notably, the first component of deal price was funded with $175 million as cash on hand and borrowing against the company's revolving credit facility worth $125 million. The acquisition is expected to be accretive to LendingTree's adjusted earnings per share (EPS) in 2019.

Founded in 2006, QuoteWizard successfully helped almost 40 million customers in finding ideal insurance policy. At the end of the first half of 2018, QuoteWizard had $75.6 million in revenues and nearly $12.8 million in Adjusted EBITDA.

"I'm thrilled to formally welcome QuoteWizard to the LendingTree team," said Doug Lebda, founder and CEO of LendingTree. "Expanding LendingTree's product portfolio through the acquisition of QuoteWizard creates an incredible opportunity to drive continued growth and deliver shareholder value by further diversifying the business, leveraging the strength of the LendingTree brand, and capitalizing on the ongoing digitalization of financial services," Lebda stated.

Along with the deal’s closure, LendingTree also announced amendment of its revolving credit facility. Now, the company will provide $100 million of increased borrowing capacity which would sum its borrowing capacity to $350 million.

Notably, LendingTree’s inorganic growth strategies remain impressive. While higher costs due to advertising are likely to hurt the company’s bottom line, the company’s commitment to expand product offerings beyond mortgage-related products bodes well for the long term.

LendingTree’s shares have surged around 149.6% over the past two years compared with the industry’s growth of 39.6%.

The stock currently carries a Zacks Rank #3 (Hold).

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