Reports say that HostGator is in talks with Endurance International Group to reach an acqusition agreement

Several Reports Suggest Endurance International Group to Acquire HostGator

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In what appears to be an internal email to HostGator employees posted on PasteBin, CEO Brent Oxley confirms rumors that the hosting company is in the process of an acquisition deal with Endurance International Group.

On Thursday it was reported that web hosting provider Endurance is raising $225 million to back its acquisition of HostGator, a Houston-based web host with more than 12,000 servers under management and 400,000 customers.

In the email addressed to “Fellow Gators”, Oxley says if everything goes according to plan, Endurance will purchase HostGator in the next 3-4 weeks.

Endurance has acquired many web hosting providers including FatCow and BlueHost. Oxley describes EIG’s success in acquiring Bluehost, one of HostGator’s top competitors, in November 2010 in the email.

“Bluehost was at 280 employees when the sale closed and they have 450 today. Their management team has stayed the same and the culture has stayed the same. Now, the Bluehost culture, employees, and philosophy have taken hold to become the new status quo of EIG,” Oxley writes.

Oxley gives many reasons for wanting to sell HostGator, the company he established in 2002 when he was 18, including personal reasons like wanting to travel with his wife before they have kids, but also more business-minded reasons like tax increases in 2013 and his worry about “the financial path [the US] is headed down.”

Oxley is also surprisingly candid in HostGator’s failures, which may indicate that the email was not meant for anyone outside of the company.

“I’ve failed more times than I can count to launch software that would allow us to compete as a registrar,” Oxley writes. According to its website, HostGator currently hosts eight million domains.

“We have tried and failed to develop a billing system that has automated and can integrate with our key systems such as chat, phone, affiliates, and tickets. I think we are finally on the right track, but unfortunately I no longer have the patience to wait for it to all come together. Thankfully Endurance International Group has tackled a lot of these challenges already.”

He assures employees that if the deal is completed, HostGator’s management team “won’t be going anywhere.”

Once the deal is complete, Oxley says he will continue to own all of the HostGator occupied buildings through Oxley Leasing. Endurance and Oxley will have a leasing deal in place to expand its Austin office by 30,000 square feet and Houston by another 20,000 square feet.

Endurance CEO Hari Ravichandran plans to do a major renovation of the Houston office which Oxley says indicates if Endurance “planned on downsizing [it] wouldn’t be signing such huge expansions in both Houston and Austin.”

Texas is an extremely competitive market for hosting providers, so it will be interesting to see how this deal will help HostGator expand. Oxley says with the acquisition EIG “will even be bigger than GoDaddy.”

The WHIR has reached out to HostGator for comment and will update the story when we hear back.

In November 2011, private equity firms Warburg Pincus and Goldman Sachs Capital Partners acquired a majority stake in EIG from Accel-KKR, which will also retain a stake in the company.

Talk back: Can you relate to Oxley’s concerns in running a US hosting business? What do you think of the acquisition news? Let us know in a comment.

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5 Comments

  1. What precautionary measure do you think should be taken? I mean, people should already be making backups etc... If things go down, a simple transfer out would do. I hope HostGator is another EIG success story though :) Thanks, Shruti

    Reply
  2. I worked for HostGator as a Jr. Admin (support tech, phone tech, whatever) for a while. It was a good experience and I was really impressed with the way they care for us so that we can concentrate on caring for our customers. After the email was sent out, we had a meeting and they basically told us that BlueHost and EIG's culture is not that much different from ours and that they are investigating every angle of this deal to make sure that the changes are positive. I have confidence that after the deal HostGator will grow even more while keeping the focus on employee happiness and customer satisfaction. Also, I quit HG so I can go back to school, really miss them and wish them well.

    Reply
    • Voice of HG

      Your had a good experiences? Culture? Care for us? Your must still work for hostgator because I had an awful experience with the company and its management. The company hides the fact that they have no real culture like other hosts. They suck and one day it will really show through to the public!

      Reply
  3. I've been using HostGator for low-cost shared hosting since when Brent Oxley himself use to answer the tech support phone calls. I've been very happy with Hostgator. Expert phone and ticket support for difficult issues. Quick response times. I'm concerned that the quality of service might change after the acquisition by EIG.

    Reply
  4. Hostgator is a good web host. It's not a good news if it's confirmed to be true.

    Reply