Rightside Group, Ltd. announced that it has signed a definitive agreement for the sale of eNom to Tucows Inc. (Nasdaq:TCX) for $83.5 million, less a net working capital adjustment of $6.8 million, resulting in net cash at closing of $76.7 million.
The eNom is a wholesale registrar that provides domain services to a network of over 28,000 resellers.
eNom has approximately 14.5 million domains under management and generated approximately $116.5 million in revenue through Q3 2016, primarily from its wholesale registrar business. As part of Tucows, eNom will continue to be a distribution partner for Rightside’s new gTLDs.
Rightside will receive $76.7 million of net cash proceeds from the transaction, net of working capital adjustments. Concurrent with close, Rightside will pay approximately $4 million of transaction related expenses and will repay all of the debt outstanding under its credit facility. Following the transaction, Rightside will be in a strong financial position with approximately $90 million in cash on its balance sheet.
“The agreement sharpens Rightside’s focus on its Registry and retail Registrar businesses, and provides additional capital to drive growth and enhance shareholder value.”
“Rightside recently conducted an extensive strategic review and concluded that while it is in a strong position to leverage the global trends in the domain industry, 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. The divestiture is consistent with Rightside’s strategy to position its portfolio of new generic Top Level Domains (new gTLDs) for long-term growth by leveraging the end-to-end domain services offered by Rightside through the vertical integration of its flagship retail registrar, Name.com, and its Registry business. The divestiture also enhances Rightside’s ability to make additional investments in the Registry business as the market for new domains continues to develop.”
“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,” said Chief Executive Officer Taryn Naidu. “The market for new gTLDs is rapidly developing and the divestiture enables us to more intensely focus on our higher growth and higher margin businesses, where our Registry and Name.com businesses are leading the way with the new domains.”
“We would like to thank our eNom colleagues for their hard work in building such a well-respected business and for their dedication to Rightside. We look forward to seeing their continued success and continuing to work with eNom as a valuable distribution partner as part of Tucows,” added Naidu.
“eNom is one of the great and long-lived brands in the domain industry, with an outstanding reputation among its large network of resellers,” said Elliot Noss, President and Chief Executive Officer of Tucows. “We welcome eNom’s talented team into the Tucows family as they continue to deliver innovative products and excellent service to resellers and end-customers.”
Rightside has hired Barclays Capital Inc. as its financial advisor and Wilson Sonsini Goodrich & Rosati, P.C. as its legal advisor on this transaction. Following this transaction, Rightside will continue to evaluate strategic options, including the potential use of proceeds from this divestiture.