Three private-equity firms are closing in on a deal to buy Scottsdale-based domain-registrar Go Daddy Group Inc. for between $2 billion and $2.5 billion, according to media reports Friday.
The Associated Press reported a deal is expected by Tuesday. A source spoke to the news service on condition of anonymity because the deal hasn't been publicly announced.
The sale would be led by New York-based Kohlberg Kravis Roberts & Co. and Silver Lake Partners. Technology Crossover Ventures would be a third, but smaller, partner. KKR's desire for Go Daddy was reported earlier by the New York Post.
A Go Daddy spokeswoman declined to comment Friday. A KKR spokesman said the company does not comment on rumors. A Silver Lake Partners spokeswoman also would not comment, and representatives for Technology Crossover Ventures could not be reached.
Sources cautioned that no deal has been finalized and that it's typical for details of large private-equity transactions to leak before they are consummated, causing speculation.
Go Daddy's outspoken founder and CEO, Bob Parsons, is expected to stay on after the buyout to lead the company, the Wall Street Journal reported.
Rumors about Go Daddy's sale have surfaced before, and the privately held company once flirted with going public.
The Web hummed with reports in September that Go Daddy had hired San Francisco-based Qatalyst Partners to find a buyer. The company ended up taking itself off the market even though reports said there were companies willing to meet Go Daddy's $1.5 billion to $2 billion asking price.
In 2006, the company filed papers with the Securities and Exchange Commission to go public. In its filing, the company said it has never posted a profit, and it lost $11.6 million in 2005. Go Daddy generated $139.8 million in revenue in 2005, an increase of 92 percent from 2004, when it generated $73 million, the company said in the filing.
Go Daddy pulled the IPO, or initial public offering, when officials cited poor market conditions for technology stocks.
Go Daddy revenue was listed as $610 million on the 2010 Inc. 5000 list, up from nearly $241 million in 2006.
With its racy marketing and ubiquitous name at sporting events, Go Daddy has grown to become the largest domain registrar in the world since its founding in 1997. It manages more than 48 million domain names.
Go Daddy's potential sale comes at a high-flying time for technology and Internet-based companies. Following its IPO in May, LinkedIn had a market value of $9 billion. This week, online-video service Hulu said it was exploring putting itself up for sale after a takeover offer.
The reason Go Daddy has drawn so much private-equity interest is it has been able to build up critical mass in the website-hosting and Web-presence market, said Melanie Posey, analyst with IDC in New York.
"It's not the easiest thing to do when you're talking customer bases in small business and startups," she said. "There are really interesting economies of scale that you can get in this business by being as big as they are."
She credited the company's racy Super Bowl and NASCAR ads in helping build brand awareness, and she said Go Daddy has done a good job of selling other products beyond domain names. Those looking for a URL to start a website often also purchase hosting and e-commerce services and search-engine marketing.
"You can get it all from them," Posey said. "It's kind of like your Web-presence one-stop shop."
She said the company is closing in on $1 billion in revenue.
"It's not like they've got $10 million in revenue and somebody is going to buy them for $2 billion," Posey said. "It's not like the (the reported sales price) is really out of whack."
by John Yantis The Arizona Republic Jun. 24, 2011 03:05 PM
Report: Scottsdale-based GoDaddy sale rumored
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