In an effort to expand its business beyond setting up websites, US domain name provider GoDaddy is currently in exclusive negotiations with Host Europe Group (HEG) with the aim of acquiring the independent web hosting firm.
The Arizona-based company has grown its business since being founded in 1997 to become the world's largest website registering service. GoDaddy has also begun to host websites for consumers and small businesses with the aim of gaining new revenue streams.
If the company does acquire HEG, it will gain an expanded customer base in Europe and will be able to move into the web hosting business which is significantly more profitable than selling domains. GoDaddy is quite well-known in the US due to its television advertisements that have aired during the Super Bowl, but this acquisition could help the company gain the connections it would need to expand overseas.
Those familiar with HEG's business have estimated that the company could be valued at around €1.8 billion which is significantly higher than its €140 million projected core earnings for 2016. Deutsche Bank has estimated that in 2017 GoDaddy will be able to generate $1 billion from domain sales, $750 million from hosting and an additional $325 million from selling its customers software to run businesses through their sites with the company.
GoDaddy ended up in exclusive talks with HEG after it beat out rival bids by the German Internet service provider United Internet, the buyout firm Centerbridge, Deutsche Telekom and Permira.
If the two companies do manage to agree to a deal, Barclays, Citigroup, Deutsche Bank, Morgan Stanley and RBC are all ready and willing to finance the acquisition.
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