Tucows, a Toronto-based provider of internet services, has agreed to pay US$83.5 million to buy wholesale domain-name registrar eNom from Rightside Group, of Kirkland, Wash., just outside Seattle. The transaction was expected to close by end of day, Tucows said in a release.
Tucows said acquiring the brand will give it an additional 14.5 million domains under management and another 28,000 active resellers, making it the second-largest domain registrar in the world, with a total network of 29 million domains and more than 40,000 resellers.
Rightside has both registry and registrar businesses. Registrars such as eNom sell domain names to the public or to resellers. Separately, Rightside’s registry owns domain name extensions — also known as top-level domains — such as .band, .dance and .sale. In July, Rightside rejected a public bid by Bellevue, Wash.-based Donuts to acquire its registry of domain names for $70 million.
“Rightside recently conducted an extensive strategic review and concluded that . . . it would further benefit from divesting eNom, in order to place a greater focus on its higher-growth and higher-margin Registry and retail Registrar businesses,” Rightside said in its own release.
Rightside president and CEO Taryn Naidu added, “The divestiture of eNom creates a stronger alignment between Rightside’s vision, strategy and financial profile. and we believe this is the best way to increase shareholder value.”
Factoring in a net working-capital adjustment of $6.8 million, the sale will result in net cash at closing of $76.7 million for Rightside. Tucows shares closed up US$6.80, or 18.7 percent. Rightside shares closed up $1.07, or 13 percent, at $9.21.
As of September, GoDaddy was the largest domain registrar, with 53.9 million domains, according to DomainState. eNom was the second-largest and Tucows the third-largest.
Elliot Noss, Tucows’ CEO, said of the transaction, “This industry has changed so much since Tucows and eNom each launched wholesale registrar services over fifteen years ago . . . . Scale is absolutely critical. This is a rare deal that gives Tucows and its investors exactly that, while offering an immediate cash on cash return.”