Stock Spinoffs

Doh-Main! Marchex Axes Archeo Spinoff Idea

Spin Doctor
The list of upcoming spins is now a little shorter. After an internal strategic review, Marchex (MCHX) announced that it was tabling plans to spin off Archeo, its domain name business, to shareholders. After selling off certain Archeo assets earlier this year, the company determined that Archeo’s ‘small financial profile’ didn’t make sense for an independent company given the costs and complexities. Apparently, Marchex management doesn’t subscribe to the Epazz (EPAZ) book on spinoffs where nothing is too small or meaningless to be spun off.

The division and its potential ‘nine figure’ asset base will remain part of Marchex, but I don’t expect Archeo to get much corporate attention. Elliot Silver points out in his blog that there is not even a mention of a domain name business in Marchex’s company overview and ‘About Us’ page. Its website also lacks any references to Archeo. It seems like Marchex’s plan is to use Archeo’s cash flow to fund its capital distribution obligations, starting with an expected $0.02 dividend beginning in Q1 2014. The payout will change based on Archeo’s cash generation , but I didn’t see any details fleshing that out. Maybe the new domain marketplace it is launching will help drive sales and fuel larger capital distributions.

It’s worth remembering that a spinoff announcement doesn’t always translate into an actual spin.

Disclosure: Author holds no position in any stock mentioned.

Related articles
Exit mobile version