After Comprehensive Review of Alternatives, Current Strategy Is Best Path to Shareholder Value Strong Growth Trends Have Continued in May Announces Departure of CFO and Appointment of Interim CFO
Leaf Group Ltd., a diversified consumer internet company, announced that its Board of Directors has concluded its previously announced review of strategic alternatives to maximize shareholder value. The Board of Directors assessed an exhaustive range of alternatives over the course of the last year, during which time the Company’s business and operating environment have also improved. As a result of the comprehensive review, the Board of Directors unanimously determined that the Company’s current business strategy as an independent company is the best path forward to create the greatest value for Leaf Group’s shareholders.
Sean Moriarty, Chief Executive Officer of Leaf Group said, “Over the past several years, we have been focused on executing a successful turnaround of the Company. As part of that effort, we have made significant changes across the organization, streamlining our business, strengthening our team, optimizing our operations and driving much-improved financial performance. Our brands have not only proven themselves to be quite resilient in these uncertain times, but our consistent focus on the home, art & design, and fitness & wellness sectors well positions us to address the needs of our consumers as the pandemic accelerates digital growth.”
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The strategic review was conducted by a Special Committee of the Board of Directors consisting of independent directors, with the support of outside financial and legal advisors. Over the course of the comprehensive review, the Special Committee of the Board of Directors and its advisors considered a full range of alternatives to maximize shareholder value, including a sale of the Company, divestitures of certain assets and various financing alternatives. Leaf Group and its advisors contacted over 160 potential acquirers regarding a possible sale of the Company or certain assets, and entered into non-disclosure agreements with 45 of those parties to facilitate discussions. Additionally, Leaf Group and its advisors contacted over 48 companies to discuss financing options.
The Company engaged in negotiations with parties concerning potential asset sales; however, this process did not yield any transaction offers that the Board of Directors and its advisors determined would provide more value to Leaf Group’s shareholders than the value that can be created by the Company’s continued ownership and operation of those assets. While multiple parties expressed interest in potential transactions related to certain of the Company’s assets, no party submitted an offer to acquire the entire company.
“We have come away from this process more confident than ever that Leaf Group’s significant organic growth potential — as demonstrated by our recent strong performance — can deliver substantially more value to our shareholders than any other alternative currently available to the Company,” said James Quandt, Chair of Leaf Group’s Board of Directors and a member of the Special Committee. “Our comprehensive review helped reaffirm that the best path forward for all of Leaf Group’s stakeholders is for us to remain focused on executing on our strategy — with a continued emphasis on building digital first brands in high-passion categories.”
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Early Trends Positive for Second Quarter
The positive trends for the second quarter of 2020, which the Company previewed in its Q1 2020 shareholder letter, are continuing with particularly strong performance by Society6, the Company’s biggest operating unit. While the Company has not typically provided guidance and will not generally be providing guidance, given the unique circumstances of the pandemic, the Company announced that the April business trends identified in its Q1 2020 shareholder letter have continued through the date of this release.
Leaf Group will report actual financial results for the second quarter 2020 on its regular earnings schedule.
Departure of Chief Financial Officer and Appointment of Interim Chief Financial Officer
Additionally, Leaf Group today announced that Chief Financial Officer Jantoon Reigersman stepped down to pursue other opportunities, effective May 19, 2020. Brian Gephart, Chief Accounting Officer, has been appointed interim CFO and will serve in that role until a permanent successor for Mr. Reigersman has been named. Mr. Gephart joined Leaf Group in 2019 following positions at JH Capital Group and PricewaterhouseCoopers, and has extensive expertise in capital markets, technical accounting and financial reporting.
“On behalf of the Board of Directors and the management team, I want to thank Jantoon for his leadership and the great contributions he has made to Leaf Group over the years,” said Mr. Moriarty. “We wish him the best in his future endeavors.”
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