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Saturday, November 21, 
4:39 am
Alix Partners LLC presents Middle Market Review

Why is Tree.com suing when it can merge?

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treedotcom125x100.gifTree.com Inc. (NASDAQ:TREE) unit -- LendingTree LLC -- has filed suit against software vendor Mortech Inc., which helps LendingTree run its mortgage comparison service, because Google Inc. (NASDAQ:GOOG) has sought to purchase the same tools from Mortech, notes The New York Times Bits blog. LendingTree evidently thinks the Google agreement is a breach of contract between Mortech and LendingTree.

LendingTree clearly fears Google is planning to launch a rival mortgage comparison service, according to the Times report. On the surface, jumping to such a conclusion seems a bit paranoid, but Google Maps already provides real estate listing searches that compete with Tree.com's RealEstate.com search service, so adding a mortgage search tool certainly seems like a natural extension to Google's stable of search products.

So if Tree.com's relationship with Mortech is so important to its LendingTree business, why poison the well with a lawsuit when it could simply seek out a merger?

Privately held Mortech is in business to make money for Mortech and its owners, not Tree.com (unless it is a stakeholder, which is not readily available information). If Google or any other respectable company offers to pay for a license to use Mortech's software, the company naturally would provide the service. However, a merger of the two companies would align their interests.

The news, which first surfaced after Wednesday's market close, pushed Tree.com shares down 61 cents, or 7.14%, to $7.93 in Thursday trading. - Matthew Wurtzel





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