An image from UK2's own webuywebhosts.com website
(WEB HOST INDUSTRY REVIEW) — Private equity firm Lloyds TSB Development Capital (www.ldc.co.uk) announced on Wednesday that it has acquired a majority stake in the major web hosting provider UK2 Group (www.uk2group.com), paying roughly $77 million for that stake, in partnership with the company’s management team.
Founded in 1997, the UK2 Group has grown into one of the most significant players in the shared and virtualized hosting business, in large part through its own acquisition of a series of significant hosting properties – such as midPhase (www.midphase.com) and WestHost (www.westhost.com) – and the launch of several of its own key brands, including 100TB.com (www.100tb.com) VPS.NET (www.vps.net), which it describes as “the fourth largest true public cloud provider in the world.”
Ditlev Bredahl, UK2 Group’s CEO of more than five years is leaving the company to focus exclusively on his role as CEO of OnApp (www.onapp.com), the cloud hosting software platform spun off from the technology originally created for VPS.NET, and now offering one of the few platforms thorugh which hosting providers can build out their own cloud infrastructures.
Former Cable & Wireless Worldwide chief strategy officer Phil Male will join the company as executive chairman. He will work with the existing management to focus on launching new services and driving growth both organically and through acquisition.
With an established reputation as a buyer of hosting companies, and now with the resources of LDC behind it, the UK2 Group seems like a pretty sure bet to make some significant hosting industry acquisitions in the immediate future. The company, after all, owns the domain webuywebhosts.com.
Bredahl will reportedly remain with the company long enough to transition management to Male, before leaving to work only on OnApp. The press release says OnApp will “continue to be controlled by its existing shareholders,” which it does not identify, but which do not seem to include LDC.
“I’m delighted to be joining such an innovative organization,” says Male, quoted in the press release, “and look forward to working with the existing management team to drive the company forward. The increasing demand for hosting services, as we all move to a more ‘cloud’ based world, means that the UK2 Group is perfectly positioned to take advantage of, and innovate in, this fast growing sector.”
Male’s comments sync up pretty closely with the common-sense interpretation that LDC has made the move with the intent of getting a strong foothold in the market for “cloud services” while the market for those services is still in the current sky’s-the-limit period of opportunity. Getting into the cloud services market in a year or two isn’t likely to be quite as golden an opportunity.
UK2 Group was advised in the deal by Torch Partners, who acted as exclusive financial advisor in the deal. In a notice sent to press, Torch said the deal underscores its position as a leading data center and hosting advisor. Its recent transactions included the sale of Lumison to Bridgepoint Development Capital, and the acquisition of Internet Facilitators Limited by TelecityGroup.
Macfarlanes LLP acted as legal advisor to UK2 Group and its management, while LDC was advised by Arma Partners and CMS Cameron McKenna LLP.
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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