Match Group, an online dating company, has agreed to buy South Korean company Hyperconnect in a cash-and-stock deal worth $1.73 billion. Shares rose 2.4% in Wednesday’s pre-market trading session.
The transaction, which awaits certain regulatory approvals, is expected to close in the second quarter of this year. According to the terms of the deal, Match Group (MTCH) has the option to pay 50% in cash and 50% through an issue of new shares or to pay 100% in cash.
Seoul-based Hyperconnect is a social discovery and video technology company operating two flagship apps, Azar and Hakuna Live, launched in 2014 and 2019, respectively. The app developer, which is driving social connections with proprietary video and AI technology recorded more than $200 million in revenue last year, up 50% from 2019.
Match Group said that the acquisition would add two high-growth social discovery products to its portfolio and boost its presence in key Asian markets. (See Match Group stock analysis on TipRanks)
Match Group CEO Shar Dubey commented, “We will leverage our deep bench of expertise to help accelerate Hyperconnect’s already-impressive growth, look to deploy Hyperconnect’s technologies across our existing portfolio, and continue to invest in their growth.”
Last week, the company reported 4Q results. Match Group’s 4Q adjusted earnings remained flat year-over-year at $0.48 per share and missed Street estimates by a penny. Revenues increased 19% to $651.4 million and exceeded analysts’ expectations of $648.8 million. As for 2021, the company expects sales in the range of $2.75 to $2.85 billion versus the consensus estimate of $2.39 billion.
Following the deal announcement, Oppenheimer analyst Jason Helfstein reiterated a Buy rating on the stock with a price target of $160 (0.7% upside potential). Helfstein noted, “Hyperconnect’s two leading products, Azar and Hakuna, offer in-app gifting and live-streaming social interaction between users, building upon success MTCH has seen with POF’s live-streaming features rolled out in 2020.”
“Hyperconnect further entrenches MTCH within APAC region”, the analyst added.
Shares have rallied 37.1% over the past six months, while Wall Street analysts are still bullish about the stock. The Strong Buy consensus rating boasts 8 Buy ratings versus 2 Hold ratings. Looking ahead, the average analyst price target stands at $165.20, putting the upside potential at about 4% over the next 12 months.
Match Group scores an 8 of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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