The Executive Headlines

J2 Global CEO says consensus spin-offs unleash the value of cloud fax and digital media businesses

CXOs

The Executive Headlines
2021-05-12 18:01:23

J2 Global CEO Vivek Shah told CNBC on Tuesday that the company is considering spinning off its cloud fax service as management aims to unleash the value of both businesses.

In April, a Los Angeles-based digital media company announced a separation plan to establish a new publicly traded company called Consensus.

“I think they’re both undervalued. I think part of the reason they’re undervalued is that they’re in one company,” Shah said with Jim Cramer. “Money” said in an interview.

“I think this creates tremendous value, and I think it’s great to do it from a powerful standpoint.”

J2 had a market capitalization of $ 5.5 billion at the end of Tuesday.

Online fax products are primarily used in the healthcare sector, allowing hospitals to share patient medical documents while eliminating traditional fax machines. According to the annual report, fax services accounted for approximately 22% of J2 Global’s $ 1.49 billion in revenue in 2020.

J2 Global’s portfolio includes the IGN, Mashable and Humble Bundle websites, and the consensus predicts that it will generate $ 342 million in revenue this year.

The split will give J2 and consensus their own leadership, focus and balance sheet, leaving the two companies with a clear companion to compete with.

“The short-term consensus for me is actually the play of moving from on-premises to the cloud,” he said. “In the long run, the real focus of the company is to move from a document-centric structure to a data-centric structure.”

As part of the separation, J2 President and Chief Financial Officer Scott Turicchi will be promoted to Chief Executive Officer of the Consensus. Shah continues to sit at the top of the J2.

The spin-off does not require the approval of shareholders who will receive approximately 80% of the new company’s common stock.

The transaction is expected to close in the third quarter.

J2’s share has risen by more than 25% since the beginning of the year. However, since the announcement of the spin-off, the share price has fallen 4% to $ 122.83.

J2 Global CEO says consensus spin-offs unleash the value of cloud fax and digital media businesses