LendingTree Agrees to Buy QuoteWizard for $370.2 Million

In an effort to diversify its product portfolio and expand in the insurance industry, LendingTree, Inc. TREE has agreed to acquire one of the largest online insurance comparison marketplaces, QuoteWizard.com, LLC. The deal is expected to be completed by fourth-quarter 2018 and is subject to customary closing conditions.

Per the agreement, the total equity purchase consideration is $370.2 million. Of this, $300 million will likely be paid in cash at the time of the deal closure along with contingent payments of up to $70.2 million. This is subject to the achievement of some growth targets of the company for over 3 years.

Notably, 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.

The founder and CEO of LendingTree, Doug Lebda stated, “By acquiring QuoteWizard, LendingTree will establish itself as a leading player in the online insurance advertising industry, while continuing our ongoing diversification within the financial services category.”

Lebda added, “With QuoteWizard's proprietary technology platform, direct relationships with over 30 of the top-tier carriers and a network of nearly 10,000 agents, combined with LendingTree's strong brand and extensive reach, we will be well-poised to capitalize on the growing market opportunity that stems from the ongoing digitalization of the financial services industry.”

For the transaction, Bank of America’s BAC Merrill Lynch advised LendingTree. On the other hand, QuoteWizard was advised by GCA Advisors, LLC.

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

LendingTree’s shares have lost 18.7% in the past year compared with 3.7% decline recorded by the industry.

Currently, LendingTree has a Zacks Rank #3 (Hold).

A couple of better-ranked stocks from the finance space are Ameriprise Financial, Inc. AMP and SEI Investments Co. SEIC.

Ameriprise Financial’s shares have gained 47.8% in the past two years. Further, its earnings estimates for 2018 have remained unchanged in the past 30 days. The stock currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

SEI Investments also has a Zacks Rank of 2. In the past 30 days, it has witnessed a marginal upward earnings estimate revision for the current year. Its share price has increased 33.1% in the past two years.

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