Web Hosting Year in Review: 2005 - General Merger and Acquisition Mania
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Almost every deal after those made by the telecoms may look small in comparison, but the rest of the merger and acquisition activity allowed for some substantial repositioning in the web hosting arena. Take Interland, for instance. Once a very big name in web hosting, the company began to narrow its focus this year. It sold off its Hostcentric shared hosting assets to Caird Corporation for $3.4 million. Interland also sold off its dedicated server assets to Peer 1 Network. The $14 million deal saw 8,300 dedicated servers change hands, along with data centers in Georgia, Florida, and California.
But Interland didn’t simply divest assets. It also made a purchase, namely Web.com, for $4.4 million in cash, restricted stock and assumed liabilities. The deal included 9,000 hosting accounts, ownership of the Web.com domain and an accredited domain registrar. Interland should make back the money it spent on the acquisition within five years, as Web.com is expected to add about $900,000 to Interland’s annual hosting revenues.
Another big name that saw some activity this year was Register.com. Some of you might remember this company as one of the first to become a domain name registrar once ICANN opened domain name registration to companies other than Network Solutions (now owned by VeriSign). Register.com was bought in August by private equity capital firm Vector Capital for $7.81 per share in cash, in a deal that totaled about $200 million. Vector wasn’t the only firm interested in Register.com; the web host had rejected an offer from RCM Acquisition the previous month that amounted to only $7.10 per share.
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