InfoSpace Pays $287.5M for TaxACT

Publicly traded online search company InfoSpace Inc. is paying $287.5 million in cash to acquire online tax preparation software company TaxACT. The deal is expected to close in the first quarter of 2012. Privately held TaxACT is based in Cedar Rapids, Iowa. TA Associates, the majority shareholder of the TaxACT business, will sell its full holdings as part of this transaction, the company announced.

PRESS RELEASE
InfoSpace, Inc. (NASDAQ: INSP), a leader in online search, today announced that it has signed a definitive agreement to acquire TaxACT, a leading provider of online tax solutions, for $287.5 million in cash. The acquisition is subject to satisfaction of customary closing conditions and is expected to close in the first quarter of 2012.

“The acquisition of TaxACT is significant for our Company, and consistent with our capital deployment objectives,” said William J. Ruckelshaus, President and Chief Executive Officer of InfoSpace. “As a leading brand with a loyal, growing customer base and a sustained track record, TaxACT is well positioned to grow in the large and enduring tax preparation category. As the market continues its shift toward online ‘do-it-yourself’ tax preparation, we are confident that we can leverage our online expertise, TaxACT’s industry leading solutions, and the fantastic TaxACT management team to drive future growth. The financial benefits of this transaction are compelling and provide us ongoing flexibility to invest in our businesses to further enhance shareholder value.”

The transaction is expected to be immediately accretive to InfoSpace earnings per share and year one return on shareholder capital is expected to exceed 16%. For the twelve months ending September 30, 2011, TaxACT had revenues of $78.1 million and adjusted EBITDA of $37.8 million. For the twelve months ending September 30, 2011, InfoSpace and TaxACT together generated pro forma revenue of $290.0 million, pro forma adjusted EBITDA of $72.5 million, and pro forma non-GAAP net income of $45.6 million or $1.21 per diluted share.

Based in Cedar Rapids, Iowa, TaxACT is the second largest provider of online tax solutions. With approximately 70 full-time employees, TaxACT participates in the large and growing $20 billion tax preparation market. The Company had more than five million tax filers last season, with the vast majority of those customers filing online.

TaxACT offers the only complete free federal tax solution for “everyone.” Its offerings include a free edition, deluxe edition and state edition, for individual tax filers, and TaxACT professional for businesses. TaxACT’s offerings are available through a secure online delivery system, complemented by available desktop downloads and extensive tax and IRS expertise.

“On behalf of the entire TaxACT team, I want to express my excitement as we partner with InfoSpace,” said JoAnn Kintzel, president of TaxACT. “We are committed to providing a superior customer experience and working hard to ensure that everyone is comfortable using the TaxACT products to complete their federal tax returns for free. We have the right tools, tremendous in-house expertise, and an established consumer following. With the support of InfoSpace, we are confident that we can further strengthen our position and capitalize on the substantial opportunities in the market for online tax preparation.”

InfoSpace will fund the acquisition through a combination of cash on hand and debt, and has secured a commitment for approximately $95 million of financing in connection with this transaction. The combined company is expected to have a solid balance sheet with an estimated cash and short term investments in excess of $90 million.

Upon completion of the acquisition, 2nd Story Software, the operating company for the TaxACT business, will become a wholly-owned subsidiary of InfoSpace, and will continue operations in Cedar Rapids, Iowa as a standalone business unit led by the TaxACT management team. TA Associates, the majority shareholder of the TaxACT business, will sell its full holdings as part of this transaction.

Conference Call and Webcast
InfoSpace will host a conference today at 5:30 a.m. Pacific time / 8:30 a.m. Eastern time to discuss the acquisition of TaxACT. The live webcast and a set of slides with additional information can be accessed in the Investor Relations section of the Company’s website, at http://www.infospaceinc.com.

About InfoSpace, Inc.
InfoSpace, Inc., a leading developer of metasearch products, is focused on bringing the best of the Web to Internet users. InfoSpace’s proprietary metasearch technology combines the top results from several of the largest online search engines, providing fast and comprehensive search results. InfoSpace sites include Dogpile(R) (www.dogpile.com), InfoSpace.com(R) (www.infospace.com), MetaCrawler(R) (www.metacrawler.com), WebCrawler(R) (www.webcrawler.com), and WebFetch(R) (www.webfetch.com). InfoSpace’s metasearch technology is also available on nearly 100 partner sites, including content, community, and connectivity sites. In addition, the Company operates an innovative online search engine optimization tool, WebPosition(R) (www.webposition.com). Additional information may be found at www.infospaceinc.com.

About TaxACT
TaxACT is a privately held company founded in 1998 and critically acclaimed as a leader in developing affordable tax preparation software and Web-based services directly for consumers. TaxACT was the first to offer free Federal tax software and free e-file to all American taxpayers in the 2005 tax season. TaxACT is the 2nd most visited online destination for tax preparation services. Since 2000, TaxACT Online has assisted with more than 20 million e-filed federal returns. TaxACT is also the only Web-based tax planning and preparation product to offer a year-round tax preparation solution, with Preview Versions released in October and Final Versions released in January. Learn more about TaxACT individual, business and professional products at www.taxact.com and in the Press Center at www.taxact.com/press.

InfoSpace.com, InfoSpace, Dogpile, MetaCrawler, WebCrawler, WebFetch, and other marks are trademarks of InfoSpace, Inc. TaxACT and 2nd Story Software are trademarks of 2nd Story Software, Inc.