GoDaddy has confirmed what was likely worst kept secret the hosting industry confirming that one of the world's largest cloud platform dedicated to small independent businesses(SMB) is about to get a little bigger. GoDaddy has entered into a definitive agreement to acquire Host Europe Group (HEG) for €1.69 billion ($1.79B USD).
Host Europe has 1.7 million clients across its brands which include 123Reg, Heart Internet, Host Europe, domainFACTORY, Webfusion, Domain Monster, RedCoruna, Domainbox, Donhost, Brand Fortress, PlusServer, and Server4You, and the Paragon Internet Group which uses the trade name like TsoHost, VidaHost, and Hostroute (editor's note: Donhost and Brand Fortress are not presently separate brands).
HEG is currently owned by private equity firm Cinven which acquired the business in August 2013. GoDaddy intends to integrate the majority of HEG's while exploring strategic alternatives for HEG's PlusServer managed hosting business, including a possible sale. The PlusServer brand serves larger companies and require a dedicated field sales force and account management. Because its business model differs from GoDaddy, GoDaddy intends to explore strategic alternatives for the PlusServer business despite PlusServer generating approximately a third of Host Europe’s cash flow and estimated annual profits.
GoDaddy CEO Blake Irving in a prepared statement
GoDaddy has successfully expanded its international business to 56 global markets over the past four years. HEG has built an impressive business that generates strong top-line growth, high margins, and industry-leading customer satisfaction. By joining forces with HEG, we accelerate our expansion into Europe with the delivery of a broader range of cloud-based products, built on a single global technology platform, and supported by unparalleled customer care to help small businesses and web designers succeed online.
Patrick Pulvermüller, Group CEO of HEG added:
In combining with GoDaddy, we see a remarkable opportunity for our customers, partners and the small business ecosystem in Europe. What stands out is the strategic alignment of the companies – we're both driven to empower people to transform their ideas and bring them to life online. Together GoDaddy and HEG will provide even more value for our customers and introduce new solutions to help their ventures succeed.
Patrick Pulvermüller will lead the combined company's European operations. HEG has reported it will generate approximately US$328 million in earning with approximately US$139 million in adjusted EBITDA for 2016. The purchase price of €1.69 billion (US$1.79 billion), represents approximately 11x HEG's 2016 estimated adjusted EBITDA and includes €605 million paid to the selling shareholders and €1.08 billion in assumed net debt.
Financing for the transaction has been committed by existing lenders at interest rates similar to GoDaddy's existing term loan. The deal is expected to close in the second quarter of 2017, subject to customary regulatory and other closing requirements.
GoDaddy powers the world's largest cloud platform dedicated to small, independent ventures. With more than 14 million customers worldwide and more than 63 million domain names under management, GoDaddy is the place people come to name their idea, build a professional website, attract customers and manage their work. Our mission is to give our customers the tools, insights and the people to transform their ideas and personal initiative into success. To learn more about the company check out the GoDaddy profile page.
HEG is one of Europe's leading web services providers, one of the largest domain registrars in the UK and a leading provider of Managed Hosting in Germany. HEG has more than 1.7 million customers with over 7 million domain names under management. HEG's mission is to web enable business like no other. HEG knows that that the companies that put the web at their heart are redefining commercial success. HEG believes that every company can benefit from harnessing the power of the internet, whoever they are and whatever their needs. HEG's role in this transformation is to enable all businesses to succeed online and focuses to empower its customers to get the most out of the web; be that through its products, its customer support or its 'how to guides'. To learn more about the company check out the HostEurope profile page.