Shares of IAC jumped as much as 16.6% Tuesday morning after the company announced it is spinning off its full stake in video software company Vimeo.
Vimeo will become an independent publicly traded company after the deal closes, expected in the second quarter of 2021.
The transaction is expected to take the form of a reclassification of IAC shares, the company said.
The planned spinoff comes as software as a service (SaaS) stocks are soaring, boosted in part by the Covid-19 pandemic. Vimeo has reported strong user growth in the past year, with subscribers up 24% in November. Vimeo, which previously focused on streaming entertainment, especially from independent filmmakers, pivoted its plan a few years ago to provide video services for businesses.
The company achieved a $2.75 billion valuation in early November, after raising $150 million in equity from Thrive Capital and GIC, IAC said.