Idealab to Stock Up on GoTo
Pasadena-based Idealab has amassed billions of dollars by launching Internet start-ups and taking them public, so it’s hard to second-guess the company’s financial strategy. But a filing made with the Securities and Exchange Commission on Monday might have some observers scratching their heads.
Idealab Holdings, an Idealab subsidiary used to invest in Idealab companies, struck a series of agreements on Dec. 23 to buy nearly 4.1 million shares in Idealab spinoff GoTo.com Inc. for a total of about $332 million. That works out to an average price of $81.55 per share of the Pasadena-based company, which makes a Web search engine.
But on the day the deal was struck, GoTo.com shares (ticker symbol: GOTO) closed at just $66.94. The stock zoomed Monday to $77, up $18.25, or 31%, in Nasdaq trading.
Idealab’s chief financial officer, Brad Ramberg, said he doesn’t harbor any second thoughts about the deal, which amounts to about a 22% premium on the day it was struck. The sale is still subject to some regulatory reviews and has not yet been completed.
“Obviously we thought it was a good price,” said Ramberg, who noted that the stock price reached a high of $113.13 in November. “We think it’s a terrific company.”
He’d better. After the deal goes through, Idealab’s stake in GoTo.com would rise from 20.19% to 29.14%.
The private stock purchase was made in eight separate transactions with GoTo.com investors, including Howard L. Morgan, Oliver A. McBryan, Bob Kavner, William S. Elkus, Bruce Hendricks, Jim Armstrong, Kline Hawkes California SBIC, Moore Global Investments Ltd., Multi-Strategies Fund Ltd., Remington Investments Strategies, and Multi-Strategies Fund.
