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GoDaddy will pay $1.79 billion for HEG in major Euro expansion

Kevin Murphy, December 7, 2016, Domain Registrars

GoDaddy is to substantially increase the size of its European operation with the $1.79 billion acquisition of Host Europe Group.

The market-leading registrar confirmed yesterday earlier reports that it was on track to buy HEG, which counts several big-name British and German registrars among its brands.

The deal is worth €1.69 billion ($1.79 billion), which breaks down to €605 million to HEG shareholders and €1.08 billion in debt. It’s expected to close in the second quarter next year.

HEG’s domain brands include 123Reg and DomainMonster in the UK and DomainFactory in Germany.

The company says it has 1.7 million customers and manages over seven million domains.

But the acquisition is more concerned with HEG’s higher-margin small business hosting business, where the company has nine data centers in Europe and the US.

GoDaddy said in a press release:

Combining GoDaddy’s global technology platform with HEG’s footprint in Europe will enable the rapid deployment of a broader range of products to customers and allow for better scale of product development and go-to-market investments across both companies.

One part of the HEG business, the $92 million-a-year PlusServer, is likely to be sold off, however.

GoDaddy said that unit “serves larger, more mature companies that require a dedicated field sales force and account management”, which is not GoDaddy’s core strength.

The deal means that GoDaddy will become the owner of the annual NamesCon conference, which HEG picked up in August for an undisclosed amount.

The acquisition is unlikely to have closed before this coming January’s NamesCon, so there’s unlikely to be many obvious changes to the 2017 event.

GoDaddy said the acquisition is being financed by debt.

HEG’s current owner is private equity firm Cinven, which paid $545 million in 2013.