Private Equity Firm Siris Capital Buys Web.com

One of the largest domain name registrars, as well as a provider of a full range of internet services and online marketing solutions for small and medium‐sized businesses, Web.com, has agreed to be taken over the by private equity group Siris Capital Group in an all cash deal that values Web.com at around $2 billion.

Siris Capital Group, LLC is a private equity firm specialising in turnaround, special situations, distress, and mid-market buyout investments, according to a Bloomberg profile of the company. The Bloolmberg profile goes on to say Siris seeks to invest in companies in the healthcare, data, technology, technology-enabled business services and telecommunication sectors. They have a preference to invest in North America with investments of between $150 million and $1 billion in companies with sales value between $100 million and $1 billion. The firm targets special situations with enterprise values between $250 million and $2 billion, of which Web.com is obviously at the upper end.

Under the terms of the definitive agreement, which has been unanimously approved by Web.com’s board of directors, an affiliate of Siris will acquire all of the outstanding common stock of Web.com for $25.00 per share in cash. The purchase price represents a 30% premium over Web.com’s 90-day volume-weighted average price ended on 19 June.

According to Web.com’s latest quarterly report for the first quarter of 2018, the company has total net subscribers of approximately 3,349,000, a decline of approximately 62,000 from the end of the fourth quarter of 2017. It appears the company hit a peak in the first quarter of 2017 when it had around 3,503,000 subscribers. The company has a number of brands in its portfolio which are Network Solutions, Register.com, 1ShoppingCart, Name Secure, Name Bargain and SnapNames.

A special meeting of Web.com’s shareholders will be held as soon as practicable following the filing of a definitive proxy statement with the U.S. Securities and Exchange Commission and subsequent mailing to its shareholders.

Web.com may solicit alternative acquisition proposals from third parties during a “go-shop” period from the date of the agreement until August 5, 2018. There is no guarantee that this process will result in a superior proposal, and the agreement provides Siris with a customary right to match a superior proposal. Web.com does not intend to disclose developments with respect to the solicitation process unless and until the company determines such disclosure is appropriate.

“This transaction will provide shareholders with immediate and substantial cash value, while also providing us with a partner that shares in our commitment to customers and employees and can add strategic and operational value,” said David L. Brown, chairman, CEO and president of Web.com. “Based on our extensive engagement with Siris over the past two months and our prior discussions with them, we are confident that Siris’ support will enable Web.com to execute on its strategy and next phase of growth.”

Commenting on the transaction, Robert Aquilina, Siris Capital executive partner, said: “Web.com has a 20+ year legacy of leadership in the domain market with strong brand equity and a growing portfolio of attractive, value-add online and marketing services for SMBs. Siris looks forward to nurturing Web.com’s core domain business, supporting and anticipating the diverse needs of the company’s customers, and driving new opportunities for innovation and growth.”

Frank Baker, Co-Founder of Siris Capital, commented: “We are excited to partner with Web.com as it embarks on this new chapter of growth and market leadership. As a private company, Web.com will be able to make strategic investments for sustainable and profitable growth, while remaining agile and focused on delivering best-in-class solutions to its customers.”

The proposed transaction is expected to close in the fourth quarter of 2018 and is subject to approval by Web.com’s shareholders, along with the satisfaction of customary closing conditions and antitrust regulatory approvals, as necessary. The transaction is not subject to any financing condition. Upon completion of the acquisition, Web.com will become wholly owned by an affiliate of Siris.