RetailMeNot rockets on Harland Clarke deal

Shares in RetailMeNot rocketed in pre-market trade after the coupons website said late on Monday that it has agreed to be bought by payments solutions and marketing services company Harland Clarke Holdings for $11.60 per share in cash.

The price represents a premium of around 50% to the closing price on 7 April and approximately 36% to the average closing price for the 60 calendar days until then.

The transaction, which has been unanimously approved by RetailMeNot's board of directors, has an equity value of around $630m.

Chief executive officer and founder Cotter Cunningham said: "This is an exciting and important milestone for RetailMeNot. Not only are we delivering an immediate and significant cash premium to our stockholders, but we are also meaningfully advancing our goal of becoming a leading savings destination for consumers.

"This acquisition is a testament to the unwavering commitment and hard work of our 500 plus dedicated employees. Having founded RetailMeNot over seven years ago, I firmly believe that Valassis not only shares our commitment to consumers and merchant partners, but supports continued innovation in driving new solutions for retailers and brands."

The deal is expected to close in the second quarter of this year.

RBC Capital Markets upgraded the stock to 'sector perform' from 'underperform' on the back of the deal, but said fundamental questions remain.

It pointed out that RetailMeNot faces multiple fundamental challenges, including 'susceptible to search' algo changes - SEO accounts for more than 60% of traffic - and mobile monetization dilution.

"As part of a larger platform, RetailMeNot may be better equipped to address these issues head-on while delivering to Valassis a new consumer base that is actively seeking deals and savings opportunities.

"As a combined entity, the company will have an omnichannel media network with tens of thousands of advertisers reaching millions of consumers globally."

At 1237 BST, the shares were up 49% in pre-market trade to $11.55.