independent businesses, today announced that it has entered into a definitive agreement to acquire Host Europe Group (HEG) for 1,690 million euros (1,790 million US dollars), including 605 million euros paid to selling shareholders and 1,080 million euros in net debt assumed. The transaction has been approved by GoDaddy’s board of directors and HEG shareholders and is expected to close in the second quarter of 2017, subject to the usual closing requirements and regulators.
HEG is currently owned by Cinven, one of Europe’s leading private equity firms, which acquired the business in August 2013. GoDaddy intends to integrate the majority of HEG’s business while exploring strategic alternatives for the managed hosting business HEG PlusServer, including a possible sale.
As the largest privately owned web service provider in Europe, HEG serves small businesses and web experts and has built a thriving business with more than 1.7 million customers. With strong positions in the United Kingdom and Germany, including brands such as 123Reg, Domain Factory, Heart Internet and Host Europe, HEG complements GoDaddy’s leading position in the United States and the growing international presence.
Combining GoDaddy’s global technology platform with HEG’s footprint in Europe will enable the rapid deployment of a wide range of products to customers and allow for better scale of product development and investments in the market through both companies. GoDaddy and HEG share a strong cultural emphasis on the needs of small business customers, supporting their product offering with consultative customer service that leads to high customer retention.
“GoDaddy has successfully expanded its international business to 56 global markets over the past four years,” said GoDaddy CEO Blake Irving. “HEG has built an impressive business that generates strong growth, high margins and industry-leading customer satisfaction, and by joining forces with HEG, we accelerated our expansion in Europe with the delivery of a broad range of cloud-based products, built on a unique global technology platform and unparalleled customer support to help small businesses and web designers succeed online. “
“In combination with GoDaddy, we see a remarkable opportunity for our customers
partners and the ecosystem of small businesses in Europe,” said Patrick Pulvermüller, CEO of the HEG group. “What stands out is the strategic alignment of the companies – both are aimed at empowering people to transform their ideas and bring them online.” Together GoDaddy and HEG will provide even more value to our customers and present new solutions to help their companies to succeed. “
Patrick Pulvermüller will lead the European operations of the combined company. It will inform Andrew Low Ah Kee, executive international vice president of GoDaddy. The European GoDaddy team will inform Pulvermüller.
HEG serves customers similar to GoDaddy’s customer base – that is, small businesses and web professionals who support them. HEG has consistently reported strong superior growth and cash flow and is on track to generate approximately $ 328 million in reserves and approximately $ 139 million in adjusted EBITDA in 2016. The purchase price of € 1,690 million (1,790 million of US dollars), represents approximately 11 times the estimated adjusted EBITDA of 2016 of HEG including anticipated annual synergies. Financing for the transaction has been committed by existing lenders to interest rates similar to the existing GoDaddy term loan.
HEG today includes the PlusServer brand that serves larger, more mature companies that require a dedicated field sales force and account management. PlusServer is a high quality company with a strong financial profile and world class management team. As its business model differs from GoDaddy, GoDaddy intends to explore strategic alternatives for the PlusServer business, which is expected to generate approximately US $ 92 million in reserves and US $ 41 million in adjusted EBITDA in 2016.
HEG also owns World Hosting Day and NamesCon brands and conferences, pillars in the web hosting and domain communities. GoDaddy will continue to independently operate these brands to invest in its continued growth.
HEG has offices in Germany, the United Kingdom, France, Spain, Romania, and Bulgaria.
GoDaddy does not provide reconciliations of non-GAAP projections to GAAP, because these reconciliations are not possible without unreasonable effort, and the presentation of such reconciliations would imply an inadequate degree of precision.