Deutsche Telekom Vying to Acquire Europe's Version of EIG, Host Europe Group

Mon, 20th June 2016, 23:02

A couple of financial rags, quoting upwards of five anonymous sources, are reporting that Deutsche Telekom is eyeing a bid for the web hosting giant Host Europe Group (HEG) in a bid to beef up their own cloud operation. The German telecom firm plans to use its own web hosting subsidiary Strato as a platform to buy private equity-backed HEG and is looking to partner with U.S. private equity firms to fund the transaction.

Berlin based Strato, which was acquired by Deutsche Telekom in 2009 for 275 million euros ($310 million), is a much smaller platform than the revival it's hoping to consume. (editor’s note: consume sounds so predatory…. ‘partnering with’ sounds so much more palatable). Strato has annual earnings of approximately 30M euros or about 25% of Host Europe's annual haul. According to one source ‘familiar with the situation’, HEG owner Cinven wants to kick off a sales process before August and aims for a valuation of around 1.7 billion euros ($1.9 billion).

Host Europe Group, which became the largest privately-owned hosting group in Europe by swallowing up web hosting companies was acquired by private equity firm Cinven in 2013.  HEG brands include Host Europe, 123-reg, Heart Internet, domainFACTORY, Webfusion, Domain Monster, RedCoruna, Domainbox, Donhost, Brand Fortress, PlusServer, Server4You, and the Paragon Internet Group which uses the trade name TsoHost.

In 2014 Glasgow based iomart rejected two separate cash takeover offers from Host Europe. Over the years iomart has gone on its own buying spree acquiring a number of brands including Serverlove, RapidSwitch, Easyspace,Titan Internet, Melbourne Server Hosting and RedStation. Iomart directors at the time stated that both HEG offers undervalued the company.

Reuters previously reported Deutsche Telekom’s interest.