(WEB HOST INDUSTRY REVIEW) — In what could create one of the largest online marketing and web services companies serving small businesses, web services provider Web.com (www.web.com) has entered into an agreement to buy web host and domain registrar Register.com (www.register.com) for $135 million.
According to Web.com’s Thursday announcement, Web.com has agreed to acquire Register.com for a total purchase price of $135 million, which will be financed with approximately $20 million in existing cash, proceeds from a new $110 million term loan and a $5 million seller note. Subject to standard closing conditions, Web.com anticipates the acquisition to create a combined company with more than a million total customers, and generate more than $180 million in annualized non-GAAP subscription revenue.
“We are very excited to announce our agreement to acquire Register.com, which will bring highly complementary products, sales channels and operating capabilities to Web.com,” Web.com president and chief executive officer David Brown said in a statement. “Register.com has over 800,000 subscribers, which represents a substantial cross-and up-sell opportunity for Web.com. Additionally, small businesses signing up for domain name services have been one of Web.com’s most effective lead generation sources, making Register.com’s core competency in this area a perfect match for driving increased adoption of Web.com’s suite of online marketing and web services solutions.”
The addition of Register.com will increase Web.com’s subscriber base by more than 400 percent, generating attractive cross-selling opportunities, as well as creating cost synergies and more than $10 million in annualized pre-tax cost savings once the integration is completed.
“Register.com provides essential tools that small businesses need to build and manage their online presence, which is a perfect complement to Web.com’s focus on providing high-value add online marketing solutions,” Register.com CEO Larry Kutscher. “Today’s announcement is a significant event for our customers and prospects as our combined company will have a unique combination of scale, product breadth and distribution to address the $10 billion online services market for small businesses.”
For more than a decade, Register.com has built a reputation as a leading provider of global domain name registration, website design and management services. It has grown to manage more than two and a half million domain names, and provide a broad selection of solutions to enables small businesses and organizations to create a dynamic web presence without the need for extensive technical knowledge or resources.
Brown added, “In addition to expecting a meaningful, positive impact on our non-GAAP EPS, Web.com’s significantly enhanced scale and cash flow will provide the company with far greater resources to invest in sales and marketing programs to drive long-term growth.”
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