Thomas Strohe, intergenia's founder, will stay with the company following the deal
(WEB HOST INDUSTRY REVIEW) — One of the key hosting industry trends in recent years has been the acquisition of hosting companies by private equity firms – including investors with a history in the business, as well as bankers making their first moves in a market that is increasingly proving to be a winner on Wall Street.
This year has seen the high-profile acquisitions of Go Daddy, by KKR, Silver Lake and Technology Crossover Ventures, and of Endurance International Group, by Warburg Pincus and Goldman Sachs Capital Partners.
Late last month, Oakley Capital Investments became the most recent equity firm to invest in the hosting space, by purchasing a 51 percent majority stake in German web hosting provider intergenia AG – a deal that includes the company’s major hosting industry events brand, WorldHostingDays.
Oakley Capital is no stranger to the hosting space. Over the past five years the company has acquired companies like TelecityGroup and HostEurope, and more recently, advised the sale of managed hosting provider DediPower to Lumison.
But while the majority buyout of intergenia brings another strong web property to Oakley Capital, intergenia says it stands to benefit the most from the deal.
“The main rationale to sell a majority stake of the hosting and event businesses was to get the right partner on board for further successful growth and development of both, the hosting and the event businesses,” said Thomas Strohe, founder and marketing director of intergenia, in an interview with the WHIR.
Headquartered in Cologne, Germany, intergenia operates the hosting brands PlusServer, serverloft and SERVER4YOU. Intergenia is one of the largest dedicated hosting providers for SMEs in the German market, and the brand’s combined customer base is mostly made up of SME customers.
These days, the company is probably better known in the hosting industry for its conference and exhibition brand, WorldHostingDays, which for the past six years has taken place in Germany in March. This year it expanded with single-day WHD Local events in major European cities.
“The event business has to be put into perspective,” says Strohe. “It is strategically important to us, but from a revenue perspective [it] accounts only for a very small fraction of both our revenue and EBITDA. Our focus has always been and will be in the future to successfully grow the hosting business. The complete management team will stay on board and our plan is to continue the successful strategy of our hosting brands to continue the strong growth we have seen in the past.”
The buyout gives Oakley Capital a 51 percent stake in intergenia’s worldwide hosting activities and WorldhostingDay event business.
Intergenia’s holding company (which has been renamed to Bellaxa AG), founders, and senior management will maintain ownership of the remaining 49 percent, along with certain properties the company did not sell, including its VoIP, content and child protection services.
Strohe says the deal has been in the works for approximately 12 months and, though there has been “quite a bit of interest from different buyers” during this time, it eventually decided “that Oakley is the right partner… to grow the businesses to the next stage and to generate additional value.”
“Since we are still a 49 percent shareholder of the business, our main goal is to drive the value of our joint business as high as possible,” said Strohe. “Oakley has a tremendous track record with hosting businesses and we believe that together we can set a new highlight to that record.”
The deal will see Oakley and its partners pay $53.5 million for the 51 percent stake, with Oakley providing $13.4 million in senior financing and its fund providing $40.1 million in equity financing.
Strohe says intergenia’s strategy and operations will remain relatively unchanged, with all senior management remaining in place. The acquisition is expected to be completed on December 31.
“Intergenia has a very successful track record with strong and profitable growth in all business segments, said Strohe. “We are an extremely efficient operation with some of the highest margins in the industry. So, there is no need to change our strategy. We will continue to work with the proven and successful strategy and together with our new partner to grow our business to the next level.”
About Liam Eagle
Liam Eagle has worked as a contributor to the Web Host Industry Review since its inception in 2000, and as editor since 2003. He has been editor of the WHIR's print magazine since its launch. His daily involvement in the gathering and reporting of Web hosting news and his regular interaction with Web hosting leaders gives him an uncommonly broad appreciation of the issues and tends facing the business. Through his WHIR blog, Liam spots Web hosting trends and offers opinions on the industry-wide impacts of major developments and the motivation behind big announcements. Follow him on Twitter @liameagle
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