Melbourne IT announced on Thursday that it has acquired domain registry competitor Netregistry in a deal valued at $50.4 million in cash and stock.
According to ZDNet, 4.99 percent to 9.99 percent of outstanding Melbourne IT shares will be offered to Netregistry shareholders, and the rest will be paid in cash.
Netregistry has annual revenue of $30 million and will contribute at least $6 million of EBITA to Melbourne IT, according to the report.
In a blog post, Netregistry assured customers that all of its systems will continue to be supported through the acquisition and “there will be no disruption to Netregistry Group customers.”
As two competitors in the Australian hosting space, this transaction will give Melbourne IT a bigger piece of the market and better position it to compete against cheaper international competition. The merged company will also save $5 million through consolidation of platforms and infrastructure.
As part of the acquisition, subject to regulatory approval, Larry Bloch, founder and CEO of Netregistry Group will join the Melbourne IT board and Netregistry’s management team will join Melbourne IT. According to Melbourne IT’s acting CEO Peter Findlay in an earnings call on Thursday, the quality of Netregistry’s management team and its technology was a major driver in the acquisition.
“This transaction validates the tremendous success the Netregistry team have had since 1997 in building a leading web services business,” Bloch said. “The merged entity will benefit from the leading products, management team and efficiencies of both companies. I look forward to joining the board of Melbourne IT and being involved as the businesses are integrated, evolve and grow their services.”
Last year, Melbourne IT sold its corporate domain name and online brand services business division for $157.3 million. The transaction came a few months after Melbourne IT reported a nine-year low and plans to sell off some of its divisions to make up for it.
By selling off this division and acquiring Netregistry, Melbourne IT is better positioned to serve SMBs, adding website building and SEO capabilities.
Recently, in the Australian SMB space, startup Maestrano raised $1 million in funding to grow its a la carte cloud business app offering.