PlentyOfFish Makes a Match: Acquired by The Match Group for $575 Million

The Match Group, a subsidiary of IAC (NASDAQ:IACI), announced Tuesday that it plans to acquire PlentyOfFish for $575 million in cash. A Vancouver-based online dating website, PlentyOfFish was founded in 2003 by CEO Markus Frind.
Today, the website boasts 90 million registered users and 55,000 new sign ups each day, making it one of the most popular online dating websites. Tuesday’s acquisition will help strengthen The Match Group’s position in the online dating market prior to its initial public offering (IPO), which The Wall Street Journal anticipates will be completed in the fourth quarter of this year.

Purposeful acquisition

There may be plenty of fish in the sea, but The Match Group had its eye on this one in particular. In a press release, OkCupid co-founder and The Match Group CEO Sam Yagan said that he’s been watching PlentyOfFish for more than 10 years: “for over a decade I have followed the consistent growth of PlentyOfFish, first within North America, then globally, and most recently across platforms, as one of the most popular mobile dating products in the world.” 
The acquisition will solidify The Match Group’s supremacy in the online dating industry. IBIS World calculates that IAC (which also houses OkCupid, Match.com and Tinder) holds a 22-percent share of the online dating market. Currently, PlentyOfFish holds a 5-percent stake in the market. Once combined, IAC will have an enormous advantage over eHarmony, which holds the second largest market share at 13.5 percent.

Poised for investment opportunities

The Match Group’s PlentyOfFish acquisition comes just weeks after The Wall Street Journal reported IAC’s decision to pursue an IPO for The Match Group. The subsidiary is one of IAC’s most important growth segments — according to the company’s Q1 2015 report, The Match Group’s revenue increased by 13 percent during the period to reach $239.2 million. More specifically, revenue from the North American dating industry grew by 8 percent due to an increase in paid subscribers.
Those figures, coupled with The Match Group’s anticipated IPO, suggest that now may be a good time to invest in the online dating industry. Indeed, according another Wall Street Journal article, revenue from dating apps has increased by nearly 10 percent since 2014 and is expected to reach $628.8 million this year. In total, online dating services are anticipated to pull in $1.17 billion in revenue.
That said, the industry also comes with unique challenges that could dissuade prospective investors; namely, the stigma that is sometimes associated with online dating and the fact that, once a website successfully matches a couple, they are no longer in need of the service.
However, the PlentyOfFish CEO views these issues not as challenges, but as opportunities. In a phone interview, Frind remarked, “this market has been moving forward for 20 years, and I think that there’s still a large number of singles that haven’t tried online dating and never even considered it. As time goes on, more and more of these people come online and start using online dating.” Ultimately, his outlook for investors in this market is positive. “I certainly think that this is a market that is growing and will continue to grow for the foreseeable future,” he said.
 

Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.