Last month, when Elon Musk announced over Twitter that he planned to take Tesla private, it lead to him getting sued for fraud by the Securities and Exchange Commission (S.E.C.). XO Group, which has been publicly traded since 2000, took a far more cautious approach when it announced this past Tuesday that it will become a privately owned company and merge its brands, including The Knot, with WeddingWire. The $933 million deal is expected to close in early 2019.
Both companies released a carefully crafted, joint press release that explained that shareholders of XO Group will receive $35 per share in cash, representing a 44 percent premium to XO Group’s 12-month average closing price. After the required regulatory waiting period, XO Group CEO Mike Steib and WeddingWire CEO Tim Chi will serve as co-CEOs of the combined company; in the interim, both brands will operate independently.
What led to the merger remains a mystery; both companies, comprising 1,700 employees in 15 countries, and all consultants and photographers associated with the brands were asked not to speak publicly on the matter. Requests for comment by Rangefinder were met largely with silence, and an official statement provided only vague information. “The transaction will help accelerate growth for both companies by offering more value, services and solutions to engaged couples, wedding professionals and national registry and retail brands,” it states.
However, some investigation into both brands, which have long operated as competitors, offered some clues.
WeddingWire, which connects wedding professionals with couples, has 15 million monthly users, and a database of five million vendor reviews. XO Group—which also owns Lasting, a marriage help app, and The Bump, a resource for pregnant couples—has more than 20 million members. The Knot is estimated to reach 80 percent of brides in the United States, leading to 11 million unique visitors a month this past June alone. Efforts to expand the brand to foreign markets in the past have stalled; Ai Jie, a Chinese language wedding website launched by XO Group in 2010, is no longer in service.
Over the past few years, both companies have been acquiring smaller competitors to accelerate growth. In 2015, XO Group acquired GigMasters, an event services booking platform. In the same year, WeddingWire bought Wedding Planner S.L.U., a Spanish company that includes the websites Bodas.net, Matrimonio.com and GayWeddings.com.
The resources that both WeddingWire and The Knot offer are strikingly similar. They both vow to make wedding planning easier by allowing couples to build free wedding websites, create photo galleries and lists, handle RSVPs and house registries, and find local vendors, among other services. Industry professionals are invited to pay for advertising so that their businesses appear higher in searches on both sites.
The advertising services appear far from perfect. Vendors who use WeddingWire frequently complain about the difficulty of getting fraudulent reviews removed, while professional users of The Knot note that advertising with the site sometimes doesn’t lead to any new business.
Weddings are a $250 billion global industry, and by merging, WeddingWire and XO Group no doubt intend to dominate in the online realm worldwide—something that has eluded both brands when operating on their own. Along with gaining access to each other’s markets—the Knot operates largely in the United States, while WeddingWire has users throughout Europe and Latin America—combining creative teams will hopefully lead to more finely tuned online tools that better serve both vendors and couples.
One of the advantages of going private is that, in the absence of reporting to regulatory bodies and shareholders, executives at the company can focus on long-term strategies and goals. Whether these strategies benefit both consumers and vendors remains to be seen. Both their respective fans and detractors will have to wait a few months to see what changes the merger truly brings.