Web.com Acquires Register.com

(Ping! Zine) – Web.com, a leading provider of online marketing for small businesses, today announced it has entered into an agreement to acquire privately-held Register.com, a leading provider of global domain name registration and complementary website design and management services. Under the terms of the agreement, which is  subject to standard closing conditions, Web.com will pay $135 million and will finance the purchase through a combination of cash and long-term debt.

David Brown, President & CEO of Web.com, stated, “We are very excited to announce our agreement to acquire Register.com, which will bring highly complementary products, sales channels and operating capabilities to Web.com. Register.com has over 800,000 subscribers, which represents a substantial cross-and up-sell opportunity for Web.com. Additionally, small businesses signing up for domain name services have been one of Web.com’s most effective lead generation sources, making Register.com’s core competency in this area a perfect match for driving increased adoption of Web.com’s suite of online marketing and web services solutions.”

Brown added, “The acquisition of Register.com will be a transformative event for Web.com as we expect to expand our non-GAAP revenue base by over 80% and more than double our adjusted EBITDA run rate after realizing cost synergies that have already been identified. In addition to expecting a meaningful, positive impact on our non-GAAP EPS, Web.com’s significantly enhanced scale and cash flow will provide the company with far greater resources to invest in sales and marketing programs to drive long-term growth.”

Larry Kutscher, CEO of Register.com, stated, “Register.com provides essential tools that small businesses need to build and manage their online presence, which is a perfect complement to Web.com’s focus on providing high-value add online marketing solutions. Today’s announcement is a significant event for our customers and prospects as our combined company will have a unique combination of scale, product breadth and distribution to address the $10 billion online services market for small businesses.”

Transaction Summary and Balance Sheet Profile

Web.com has agreed to acquire Register.com for a total purchase price of $135 million, which will be financed with approximately $20 million in existing cash, proceeds from a new $110 million term loan and a $5 million seller note. Royal Bank of Canada and Wells Fargo Bank, N.A. have provided a financing commitment for a $125 million credit facility, which includes a $15 million unfunded revolver, in addition to the term loan. The company does not have current plans to utilize the revolving line of credit; however, it provides Web.com with additional financial flexibility and liquidity combined with the approximately $15 million in cash that it expects to have following the close of the transaction and the on-going positive cash flow that the company expects to generate.

Kevin Carney, CFO of Web.com, stated, “We believe the Register.com transaction will be highly rewarding for Web.com’s shareholders. We have the opportunity to significantly increase our non-GAAP EPS and create a much larger company that generates more than twice the level of adjusted EBITDA. We are highly confident in the combined company’s ability to service our debt over the next several years based on Web.com and Register.com’s high level of profitability and cash flow, combined with our expectation of reducing the combined company’s expense structure by over $10 million annually.”

RBC Capital Markets and Wells Fargo Securities acted as financial advisors and Cooley LLP acted as legal counsel to Web.com. GCA Savvian Advisors, LLC acted as financial advisor and Shearman & Sterling LLP acted as legal counsel to Register.com.