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Domain.com owner files for $400m IPO, to spend $110m buying Directi

Kevin Murphy, September 10, 2013, 10:49:45 (UTC), Domain Registrars

Endurance International, owner of Domain.com and HostGator, plans to raise up to $400 million in a Nasdaq IPO, and said it will spend up to $110 million of that buying Directi, India’s largest domain registrar.
As part of the proposed acquisition, Endurance has also agreed to bankroll Directi’s new gTLD auctions to the tune of $62 million.
The acquisition is not final, and appears to depend on a number of targets related to the IPO and Directi’s revenue performance. Endurance’s S-1 filing with the US Securities and Exchange Commission reads:

In August 2013, we entered into a master share purchase agreement to acquire all of the outstanding capital stock of Directi from Directi Holdings, the seller, for an amount we estimate will be between $100 million and $110 million in cash or, at the election of the seller, a combination of cash and shares of our common stock, subject to the satisfaction or waiver of specified customary closing conditions and the achievement of specified financial targets.

The acquisition would close in the fourth quarter this year.
As well as running a top-ten registrar (and a few dozen others), Directi subsdiary Radix Registry has 29 active new gTLD applications, 26 of which are contested.
Endurance proposes to help Radix win these contention sets. On new gTLD auctions, the S-1 says:

in connection with our proposed acquisition of Directi, we entered into agreements with entities affiliated with Directi Holdings related to participation in the auction of new top level domain extensions and domain monetization activities, pursuant to which, among other things, we may be obligated to make aggregate cash payments of up to a maximum of approximately $62 million, subject to specified terms, conditions and operational contingencies.

Endurance is a complicated company. Its most familiar brands include Domain.com, iPage, FatCow, Homestead, Bluehost, HostGator, A Small Orange, iPower and Dotster.
But since December 2011 it has been controlled and majority owned by Warburg Pincus and Goldman Sachs, which paid a reported $975 million.
Its annual revenue for the last three calendar years has been $87.8 million, $190.3 million and $292.2 million. It’s currently not profitable, recording a net loss of $139.2 million in 2012.
It has seven million domains under management and had 3.4 million customers at the end of June 2013.
Judging by the S-1, the company has over a billion dollars of debt. Directi acquisition excluded, most of its IPO proceeds would go towards paying off some of that debt.

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Comments (4)

  1. George Kirikos says:
    September 10, 2013 at 1:05 pm

    For years, it’s been claimed that DirectI was worth $300 million+ (do a search for “DirectI million” or “DirectI funding” without the quotes). It’s interesting to see the real valuation today.
    Also, we now know via the SEC filing that HostGator was acquired for $299.8 million last year (see page F-22 of the S-1 filing).

    Reply
  2. tom barrett says:
    September 10, 2013 at 3:10 pm

    Congrats to Bhavin and Divyank!
    This is well deserved.
    Tom

    Reply
  3. Ravi Surya (Fly9) says:
    September 10, 2013 at 4:01 pm

    Congratulations Bhavin…way to go.
    Are we going to see wave of M&A in next 1 year as most of the TLD players are going to left with lots of cash from auctions?

    Reply
  4. Mukesh says:
    September 10, 2013 at 7:32 pm

    Both brothers wants to chill. 😛

    Reply

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