Domain name registry Donuts Inc. did not have to look far to find its latest acquisition.
The Bellevue, Wash.-based company today announced that it has entered into a definitive agreement to buy Kirkland, Wash.-based Rightside Group for $10.60 per share, the equivalent of $213 million in cash.
Rightside is publicly traded on the Nasdaq under the ticker NAME, and the acquisition price marks a 12 percent premium over the average closing price for Rightside over the past 30 days.
“We believe that this agreement offers a substantial cash premium to our shareholders,” said Taryn Naidu, Rightside chief executive officer, in a press release. “We look forward to working closely with Donuts to consummate this merger.”
The two companies — located just a few miles apart — have flirted in the past. Last year, Rightside turned down what it called an unsolicited and opportunistic offer from Donuts to buy its domain registry business for $70 million.
At the time, Rightside’s Naidu said the offer “significantly undervalues Rightside’s Registry assets.”
“We believe Donuts’ proposal is an opportunistic attempt to acquire Rightside’s valuable portfolio of domain extensions with an undervalued price and in a manner that would not be in the best interests of Rightside shareholders,” Naidu added.
But merger discussions continued between the two companies, and things appear to have accelerated earlier this year when former Microsoft M&A executive Bruce Jaffe took the helm of Donuts in January.
Rightside operates both registry and registrar businesses. Its registry owns domain name extensions — also known as top-level domains — such as .band, .dance and .sale. The registrar sells specific domain names to the public.
Privately held and heavily funded Donuts owns close to 200 domain name extensions, including .movie, .LTD, .agency, .email, .school and .group. Donuts employs about 40 people globally, while Rightside employed 135 people at the end of 2016.
Full press release here:
“Rightside Group, Ltd. (NAME) (NASDAQ:NAME) and Donuts Inc., a leading domain name registry for new domain extensions, today announced that the two companies have entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Donuts will acquire Rightside for $10.60 per share in an all-cash tender offer, for an aggregate purchase price of approximately $213MM. The purchase price represents a premium of approximately 12% percent over Rightside’s average closing price for the 30-day trading period ended June 13, 2017 and a premium of approximately 22% percent over Rightside’s average enterprise value (excluding cash) for such period.
The Merger Agreement was unanimously approved by Rightside’s Board of Directors following a comprehensive review of strategic and financial alternatives that Rightside announced in the first quarter of 2017.
“We believe that this agreement offers a substantial cash premium to our shareholders,” said Taryn Naidu, Rightside chief executive officer. “We look forward to working closely with Donuts to consummate this merger.”
“Donuts and Rightside have a long history of working together, and we are delighted to take the next step with this transaction,” said Bruce Jaffe, Donuts chief executive officer. “We believe that the combined company will be well positioned to serve our registrar customers and the millions of businesses and individuals who are embracing new ways to brand their online identities.”
Pursuant to the terms of the Merger Agreement, the transaction will be completed through an all-cash tender offer, and closing is contingent upon tender of more than 50 percent of outstanding Rightside common shares, the receipt of certain regulatory approvals and other customary closing conditions.
The transaction does not have a financing condition and is currently expected to close during the third quarter of 2017. Following the transaction, Rightside will become a wholly-owned subsidiary of Donuts, a privately-held company, and Rightside’s common shares will no longer be listed on any public market.
Barclays Capital Inc. is serving as financial advisor to Rightside. Wilson Sonsini Goodrich & Rosati, Professional Corporation, is acting as Rightside’s legal advisor. Silicon Valley Bank is providing a credit facility to Donuts as part of this transaction. Perkins Coie LLP is acting as Donuts’ legal advisor.“