Allthingsd.com is reporting that Demand Media, Inc. (DMD) turned down $1.2 Billion dollars in a deal that would have taken the company private this past week.
The current market cap of Demand Media is $620 Million at the closing share price on Friday of around $7.25 a share. Demand is off 65% of its market cap when it went public at $17 a share.
“According to the report, “Demand Media was deep into discussions with a private equity firm to complete a deal that would have taken the online content company private for almost double its current value.”
“But Demand abandoned the effort this past week… due to a number of challenges, including complications related to its financing and the ability to retain executives in its aftermath.”
Demand Media is one of the largest company’s in the domain name space and of course owns Enom.com the world’s second largest domain registrar.
Its a interesting story and you should check it out here.
Now – is this the registrar company that shoots elephants – or the one that shoots themselves in the foot.
If it is the later – then I am all about going private 🙂
I just get so confused !!!
Enom is not GoDaddy and that is not a good thing.
Forget about domains under management, is enom gaining customers or losing customers?
Maybe investors want to buy the next best thing to Godaddy but I think the #2 registrar is FAR down from GoDaddy.
For example, what company is #2 to ebay? What company is #2 to Amazon? What company is #2 to Facebook?
Right. Tough to answer.
So, enom might be #2 to GoDaddy but that doesn’t mean they deserve a valuation anywhere near GoDaddy.
Rob
Interesting point also lets not forget that around 25% of all Enom 11M domains under management are from NameCheap.com which is approaching 3M names itself.
Of course Demand owns a lot more than enom.
If I were going to offer $1.2B to take an under valued company private it would not be Demand Media, I can think of a much better one.
Its a vast right wing & left wing conspiracy. A Publicly held corporation – I do not invest in that stuff – too much counter productive regulation – just not worth it – especially as board and executive members – maybe in a round about way Rupert Murdock wants to take in private again ?
Which brings me to Marchex – a fire sale in the making – save your money.
Sure hope they’re telling the truth about that ‘unknown private equity firm’. One of the standard tactics to fraudulently inflate stock prices is to hint at takeover potential. There are people sitting in Federal Prison, right now, who are there because they lied about precisely this sort of thing.
Until names are named (as far as the capital group in question who was serious about writing a ten figure check) reports like this should be taken as less than a grain of salt.
Which brings me to Marchex – a fire sale in the making – save your money.
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Most receivership’s will accept asset tender offers in advance of liquidation, but you have to come to the table with enough money to make a difference. Pretty damn unlikely there’d be any nickel and dime shit (cherrypicking individual names) although a publicly traded domain company going tits up would make for establishing some interesting precedence, as far as how domain names are valued in the eyes of a court.
Probably result in a receivers auction where big bundles of worthless “traffic domain” nonsensical shit are indiscriminately packaged with their desirable keyword stuff.
DemandMedia’s shares overall perfomance as a publicly traded stock has largely been a total flop …. particularly in light of the fact that the share price has stayed below 50% of it’s IPO price even during most of the US stock market’s notable rebound & rise this year.
Separate from buyout offers/rumors at premium prices or media hype ……What do ya’ll think could/ would (if anything) enable DM to have clear & solid enough financial finacial perfomance and earnings to warrant the stock to trade above it’s IPO price and really “deserve” or have clear merit to be trading in that range ???
Thanks to Obama’s Jobs Act, you all can now invest in “BullS” corporation.
Watch out for the IPO.
Hearing rumors ICANN may make a bid for BullS corporation.
I agree with most of the comments. I just wanted to add that I think it’s great for the industry to write about speculations like this. Seriously, what really just happened? Dmnd just got some attention, and that’s all! We may never know if the offer for legitimate (I am about to read the full article, so please forgive me if I missed something, no pun intended :D).
But I think it’s great to get people to start talking about the industry, tell them big numbers, etc. there are some interesting times ahead of us 🙂
I didn’t even begin to start the read the full article and I see it’s a “inside story”! Please…. Like I said, Dmnd just wanted and got some attention. Richard Rosenblatt is a smaaaart man.
Richard Rosenblatt is a smaaaart man.
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They’re either telling the truth, or they aren’t.
If they are telling the truth- if there really was a private equity firm willing to write a ten figure check for Demand Media but they passed- then that’s surprising, even shocking, but very interesting.
If they aren’t telling the truth and this is yet another example of a marginal company floating a fraudulent ‘buyout rumor’ to inspire faith (or drive up the price) of its shares, then they just committed a major financial crime for which there are people in Federal Prison, right now, for doing exactly the same thing.
Wouldn’t surprise me to see the SEC take an interest in this. If they are telling th truth, then there’s nothing to worry about.
Alot of reading to do…
Is it worth it ??
~Patricia (Busy Season)
@ Dave
I think you should read the article before making any speculative observations.
Quote :
But Demand abandoned the effort this past week — which was born from an aggressive attempt by Boston-based Thomas H. Lee Partners to purchase the company for a price of up to $1.2 billion. That was due to a number of challenges, including complications related to its financing and the ability to retain executives in its aftermath.
@ Nick.
I did read the article. I’m also someone who’s seen ‘certain things’ in the world of business before and as such, recognize ‘certain things’ when I see them again.
Whenever a marginal company reports buyout offers that ‘just didn’t quite make it’, that’s a flag. Getting a complicit capital partner to affirm that they were ‘strongly looking at the company’ is enough to generate excitement (which translates into stock price). This sort of manipulation has been going on for a long time before you or I existed and will continue after we’re gone.
Whether or not it’s the case with DMD, I have no idea, but I have my own personal opinions which I will keep to myself.
I wouldn’t call Demand a marginal company.
Wallstreet is having a hard time valuing the company.
They should split off their media biz from domain biz.
It doesnt make sense for web.com (with 700m in debt ) to be worth more than Demand.
Demand has no debt and 86m in cash.
On the flip side while Demand’s media biz is doing great, their domain biz is not doing as well as Web.com on per user basis.
Web.com IMO is running a real biz, Demand is just managing a major cashcow
If I was PE i would merge both companies, realize the synergies than float them again.
“I wouldn’t call Demand a marginal company.”
The market certainly thinks so… or at least they voted that way.
marketing for Dummies…
hype hype hype hype
In my view they’ll probably get bought out in the future for a fraction of the numbers being talked about today.
Marchex fire sale, now that would be an interesting one…Then there would be the hopes the new owners would sell marchex owned domain(s) that is worth~originally would sell between $5~$20k range, to actually ask around THAT price and not the ridiculous $50k ~ $100k… RICCARDO!!! :-)))
I am agreed to Dave.