Rightside Group, Ltd. (NAME), today announced that it has signed a definitive agreement for the sale of eNom to Tucows Inc. (TCX) for $83.5 million, less a net working capital adjustment of $6.8 million, resulting in net cash at closing of $76.7 million.
eNom has approximately 14.5 million domains under management and generated approximately $116.5 million in revenue through Q3 2016, primarily from its wholesale registrar business. As part of Tucows, eNom will continue to be a distribution partner for Rightside’s new gTLDs.
The acquisition of eNom will add 14.5 million domains under management and 28,000 active resellers. That will give Tucows a total network of over 40,000 resellers globally and 29 million domains under management, making it the second largest domain registrar in the world.
The acquisition will be funded through an amendment increasing Tucows’ existing credit facility to a total of $140 million
“The agreement sharpens Rightside’s focus on its Registry and retail Registrar businesses, and provides additional capital to drive growth and enhance shareholder value. The transaction is expected to close later today.
According to the press release out today; “Rightside recently conducted an extensive strategic review and concluded that while it is in a strong position to leverage the global trends in the domain industry, it would further benefit from divesting eNom in order to place a greater focus on its higher growth and higher margin Registry and retail Registrar businesses. The divestiture is consistent with Rightside’s strategy to position its portfolio of new generic Top Level Domains (new gTLDs) for long-term growth by leveraging the end-to-end domain services offered by Rightside through the vertical integration of its flagship retail registrar, Name.com, and its Registry business. The divestiture also enhances Rightside’s ability to make additional investments in the Registry business as the market for new domains continues to develop.”
Chief Executive Officer Taryn Naidu is quoted as saying:
“The divestiture of eNom creates a stronger alignment between Rightside’s vision, strategy and financial profile and we believe this is the best way to increase shareholder value. “The market for new gTLDs is rapidly developing and the divestiture enables us to more intensely focus on our higher growth and higher margin businesses, where our Registry and Name.com businesses are leading the way with the new domains.”
“Rightside will receive $76.7 million of net cash proceeds from the transaction, net of working capital adjustments. Concurrent with close, Rightside will pay approximately $4 million of transaction related expenses and will repay all of the debt outstanding under its credit facility. Following the transaction, Rightside will be in a strong financial position with approximately $90 million in cash on its balance sheet.”
Conference Call and Webcast
Rightside will host a conference call and audio webcast with investors and analysts Monday, January 23, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time):
Live conference call: (844) 413-1777 (domestic) or (716) 247-5761 (international)
Conference call replay available through January 28, 2017: (855) 859-2056 (domestic) or (404) 537-3406 (international)
Conference ID: 57050879
Live and archived webcast: http://www.rightside.market