- Digital media company J2 Global wants to spinoff its cloud fax service, which made up about 22% of combined revenues last year, under a new publicly traded company called Consensus.
- "I think they're both underappreciated and I think part of the reason they're underappreciated is that they're inside of one company," J2 Global CEO Vivek Shah said in a "Mad Money" interview.
- "I think this is going to create a tremendous amount of value and I think it's great to do it from a position of strength," he said.
J2 Global CEO Vivek Shah told CNBC on Tuesday the company is looking to spinoff its cloud fax service as management looks to unlock value in both businesses.
The Los Angeles-based digital media company in April announced the separation plan, which would create a new publicly traded company called Consensus.
"I think they're both underappreciated and I think part of the reason they're underappreciated is that they're inside of one company," Shah said in a "Mad Money" interview with Jim Cramer.
"I think this is going to create a tremendous amount of value and I think it's great to do it from a position of strength."
J2 had a market cap of $5.5 billion at the end of Tuesday.
The online fax product is used primarily in the healthcare sector, where hospitals can share medical documents for patients while doing away with traditional fax machines, the company said. The fax service made up about 22% of the $1.49 billion in revenue J2 Global brought in in 2020, according to its annual report.
J2 Global, whose portfolio includes the websites IGN, Mashable and Humble Bundle, is projecting that Consensus will generate as much as $342 million of revenue this year.
The split will give J2 and Consensus their own dedicated leadership, focus and balance sheets, leaving the two companies with a clear set of peers to compete with, Shah said.
"Consensus in the near term to me is really a play on the shift from on-prem to cloud," he said. "Longer term, where the company is really focused is going from a document-centric to a data-centric construct."
As part of the separation, Scott Turicchi, president and chief financial office of J2, will be elevated to chief executive of Consensus. Shah will retain his seat at the top of J2.
The spinoff will not require approval from shareholders, who are slated to receive about 80% of common stock in the new company.
The deal is slated to close in the third quarter.
Shares of J2 have rallied more than 25% from the beginning of the year. Since the announcement of the spinoff, however, the stock is down 4% at $122.83.