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KeyDrive reverses into CentralNic in $55 million deal

CentralNic this morning confirmed that it has signed a deal to merge with KeyDrive to dramatically grow its market share in the registrar and registry markets.

The deal, technically a reverse takeover, is worth up to $55 million, $10.5 million of which is performance-related.

KeyDrive is the holding company for brands including the registrars Key-Systems, Moniker and BrandShelter and the registries OpenRegistry and KSRegistry.

It is by far the bigger player in the registrar space. The combined company will have 7.1 million domains under management, 5.8 million of which will come from the Luxembourg-based firm.

“The acquisition of KeyDrive is transformative for CentralNic, significantly increasing the Company’s scale and giving it significant extra firepower in the domain name industry to rival the traditional major players,” CentralNic CEO Ben Crawford said in a statement.

CentralNic says the deal will make it the 11th-largest registrar in terms of gTLD domains under management and the fifth-largest registry back-end in terms of TLDs managed (which will hit 118).

KeyDrive had 2017 revenue of $58.26 million and adjusted EBITDA of $5.87 million. Operating profit was $4.3 million.

CentralNic had 2017 revenue of £24.3 million ($32.2 million), adjusted EBITDA of £6.6 million ($8.7 million) and operating profit of £1.8 million ($2.4 million). These numbers do not include the £3.2 million-a-year SKNIC business, which CentralNic acquired right at the end of last year.

KeyDrive CEO Alexander Siffrin will become COO of CentralNic and one of its largest shareholders, owning 16.4% of the combined company’s shares.

The acquisition itself is fairly complex.

CentralNic will raise $16.5 million cash in a share placement and it will issue $19.3 million of shares to a holding company majority-owned by Siffrin. The remaining $10.5 million is performance related and may be paid in a combination of cash and shares, mostly shares.

It’s all subject to shareholder approval at an August 1 general meeting.

Assuming the deal closes, CentralNic says its plan is to become the “GoDaddy of Emerging Markets”, though what this means in practice is not immediately clear.

It does seem that there will be some job losses as the company rationalizes staffing across its various locations.

As far as technical integration goes, CentralNic’s registrars will migrate to KeyDrive’s platform and KeyDrive’s registries will migrate to CentralNic’s registry platform.

The potential for a deal was first revealed in March, after a leak. Trading in its shares was halted as a result, but resumed this morning.

MMX could announce acquisition this week

New gTLD registry MMX could announce plans to be acquired as early as this week.

The company told the markets last week that its delayed 2017 financial results would be announced in “early May”, along with the “conclusion of the strategic review” it has been teasing investors about for almost a year.

The “strategic review”, announced last May, is exploring “how MMX can participate in a broader industry consolidation” including acquisition or merger.

MMX said last week that “constructive discussions continue to progress”.

It has previously described the duration of the negotiations, initially slated to close last September, as “frustrating”.

Unlike AIM-listed rival CentralNic, which has confirmed it is in reverse-takeover talks with KeyDrive, MMX has not revealed which potential buyer(s) it has been talking to.

MMX, also listed on AIM, has a market cap of £69.3 million ($94.3 million) today.

In January, it informally reported that its 2017 billings are expected to be around the $15.6 million mark, allowing the company to hit operating profitability for the first time.

The company runs 25 new gTLDs solo and five more in partnerships with other companies, but by far and a way the best volume performer is .vip, which accounts for well over half of its registrations largely due to its resonance in China.

CentralNic and KeyDrive in merger talks

Kevin Murphy, March 14, 2018, Domain Registries

CentralNic and KeyDrive, two major European domain firms, are in merger talks, CentralNic confirmed this morning.

CentralNic said that the transaction, should it close, would be a “reverse takeover” of itself by KeyDrive.

That’s where a private company, in this case KeyDrive, reverses into a public one, in this case AIM-listed CentralNic.

Luxembourg-based KeyDrive is the holding company for brands including the registrars Key-Systems, Moniker and BrandShelter and the registries OpenRegistry and KSRegistry.

London-based CentralNic is a registry provider for the likes of .xyz, recent acquirer of Slovakian TLD .sk, and owner of registrars Internet.bs and Instra.

CentralNic said: “CentralNic and KeyDrive Group believe that the combination of the two businesses would have strong strategic logic and economies of scale, and would represent an opportunity to create a group with advanced technology platforms delivering significant recurring revenues for every major customer type within the industry.”

If a deal should be struck, it would happen in the second quarter, the company said.

The announcement was made today after news of the talks leaked.

Trading in CentralNic shares has been temporarily suspended.

NCC sells Open Registry at huge discount

Kevin Murphy, January 6, 2017, Domain Registries

NCC Group has followed through on its promise to divest parts of its domain business, selling the Open Registry collection of companies at a huge discount to the original purchase price.

KeyDrive and a mysterious entity called Terrain.com SA have together acquired the companies for €3.75 million ($3.97 million).

That’s compared to the minimum of £7.9 million ($12 million) NCC originally paid just two years ago.

NCC said in a statement that the sold companies are:

  • Open Registry SA, a registry back-end provider with a handful of new gTLD clients.
  • ClearingHouse for Intellectual Property SA, aka CHIP, which provides software and billing support for the Trademark Clearinghouse.
  • Nexperteam CVBA, a tiny registrar.
  • Sensirius CVBA, the original Open Registry company, a new gTLD consultancy.

Missing from that list is Artemis, the new gTLD registry for .trust, which NCC separately acquired from Deutsche Post for an undisclosed sum in February 2014.

NCC is also keeping hold of its data escrow business, which is widely used by gTLD registries to comply with ICANN rules.

It’s not clear how the sold companies are being divided up between the two buyers.

KeyDrive is the Luxembourg-based holding company for the registrars Key-Systems and Moniker and other domain firms.

Terrain.com appears to belong to EuroDNS chair Xavier Buck, who was chair of Open Registry until NCC bought it, but the domain itself doesn’t seem to resolve right now.

NCC said that €2 million will be paid up front and €1.75 million will be deferred for 18 months.

US-based Moniker gets Euro data retention waiver

Kevin Murphy, September 11, 2014, Domain Registrars

ICANN has approved Moniker’s request for a partial waiver of the Registrar Accreditation Agreement based on European privacy law, despite the fact that the registrar is based in the US.

The data retention waiver for Moniker was one of a few granted to members of the KeyDrive group of registrars that were approved by ICANN yesterday.

KeyDrive is based in Luxembourg, but the waiver request was granted because complying with the 2013 RAA could violate German privacy law and Moniker’s data is stored in Germany.

ICANN said:

Registrar’s technical backend services provider as well as data storage and collection occur on servers hosted and operated in Germany, and is subject to German law. Accordingly, ICANN has determined that it is appropriate to grant Registrar a data retention waiver

Group members Key-Systems AG (a German company) Key-Systems LLC (an American company) also received waivers yesterday.

InternetX, part of Germany-based United Internet, and http.net Internet also had their requests approved.

The waiver process was introduced because the 2013 RAA requires registrars to store customer data long after their domains expire, which registrars’ lawyers say forces them to break local laws.

An EU directive implemented in many European countries says that companies cannot store personal data for longer than it is needed for the purpose for which is was collected.

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