Care.com Sells for $500 Million Cash
Care.com Inc. has agreed to a sale to IAC/InterActive Corp. for about $15 a share. The deal made nine months after Care.com faced scrutiny for providing limited vetting of its caregivers, sometimes with tragic endings. The company did “preliminary screenings” of caregivers but didn’t undertake full background checks, verify credentials of caregivers or vet day-care centers listed on its site.
“The safety of our users is our top priority and we are committed to investing in it—this is true of every business at IAC,” said Mr. Allen. “Care.com has taken encouraging steps this year and we plan to continue to strengthen safety and trust.”
“Care.com began to roll out CareCheck in July,” the spokeswoman said, referring to a background check that includes the National Sex Offender website, multi-jurisdictional criminal databases and federal and county criminal records.
Care.com’s shares, which hit nearly $26 around March, fell to just over $9 in August. On Friday, shares of Care.com rose nearly 14% to $15.10. IAC shares added 3.1% to $245.84.
IAC said the purchase is suppose to get the company into the family-care business and expects to close the transaction in early 2020. The companies said they plan to name IAC executive Tim Allen as Care.com’s chief executive, succeeding Sheila Lirio Marcelo, Care.com’s founder and chief executive.
“IAC is committed to operating marketplace businesses that put safety first and understands the investments that need to be made to do so,” IAC said. The company said it doesn’t expect to record operating profit during its first year of owning Care.com.
After Ms. Marcelo said she was leaving her post, activist hedge fund Engine Capital LP urged Care.com to pursue a sale, saying the company is “at a crossroads.” The fund said it was pleased with the prospective sale to IAC.