As the October 10 deadline approaches for non-binding offers for Host Europe Group (HEG), sources have told Reuters that Deutsche Telekom, United Internet, and GoDaddy are among the companies preparing or considering bids. After Brexit-related market volatility slowed the process of HEG parent company Cinven taking bids, it is now hopeful of signing a deal before Christmas, the sources said.
Reports emerged in June that Deutsche Telekom was considering acquiring HEG to merge it with Strato, its web hosting subsidiary. Private equity fund Hellman & Friedman is reported to be working with Deutsche Telekom, and was thought to be interested as early as April,when Cinven’s intentions to sell were first reported.
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Bids are expected to approach the asking price of €1.7 billion ($1.9 billion) reported at the time, though reports also said HEG is expected to be valued at 10 or 11 times its core earnings of 140 million euros. Rackspace’s multiple was significantly lower when it was acquired for $4.3 billion by Apollo Global Management in August.
GoDaddy investors KKR and Silver Lake were also mentioned as possible suitors in April, and adding HEG would give GoDaddy a major boost to its presence in Europe. Endurance International Group investor Warburg Pincus was also mentioned in the April report, and sources said that it is teaming with United Internet on its bid.
The latest report also includes buyout funds Providence, Permira, and EQT as possible bidders. None of the companies mentioned in the report commented.
It also says potential bidders are significantly more interested in HEG’s mass market hosting business, and would value its managed hosting unit at a lower multiple. This could potentially open the door for a two-step process, in which the units are separated during or after the purchase.