Tucows offers Internet services to a global network of over 7,000 web hosts, ISPs and other providers of Internet services, as well as provisions millions of email boxes and manages over seven million domains.

Hostopia will pay $1.6 million in cash for these assets, with adjustments to be made on closing. The web host will pay 20 percent on signing the agreement and 80 percent upon the closing of the transaction, which is scheduled to take place on May 15.

Hostopia and Tucos will work together to move these accounts to Hostopia's unified web service platform by July. The accounts involved in the transaction will continue to be served under the familiar Domain Direct brand, which will operate as a managed service by Hostopia.

"We are very pleased to have concluded this transaction. We are already hosting some of the Tucows Retail Service Group's users so the impact on customers should be minimal," says Colin Campbell, CEO of Hostopia. "Our plan is to provide customers with numerous upgrades and additional value-added services to earn their loyalty and continued business. Traditional web hosting is fast evolving to the software as a service model and Hostopia is perfectly positioned to offer these services to these customers."

This marks the second acquisition Hostopia has announced in the past couple weeks. Last week, the web host signed a definitive agreement to purchase the customer assets of web hosting provider Luxomovera, which operates as uplinkearth, in an all-cash offer for an unspecified amount. The transaction will add another 12,500 small business customers from uplinkearth's data center facility to Hostopia's unified web services platform by June 30.

Hostopia provides web services that enable small- and medium-sized businesses to establish and maintain an online presence. The company's customers are communication services providers, including telecommunication carriers, cable companies, internet service providers, domain registrars and web hosting providers.