Tucows consolidates domain reseller platforms in $83.5 million transaction.
Earlier this week I warned you to be on the lookout for big news over the next few days. Here it is.
Tucows (NASDAQ:TCX) has acquired Rightside’s (NASDAQ:NAME) eNom business for $83.5M.
The deal consolidates the #1 and #2 domain name reseller platforms eNom and OpenSRS. Tucows will pick up 14.5 million domain names under management and 28,000 active resellers.
It also leaves Rightside as a shell of its former self. eNom generated $116.5 in revenue during the first three quarters of 2016, representing 72% of Rightside’s revenue during that period. Rightside will be left with its portfolio of new top level domain names, portfolio of second level domains, Name.com
and half of NameJet, which is a partnership with Web.com. Update: Rightside’s share of NameJet was included in the transaction. This will make an interesting dynamic since Tucows just moved its expired inventory from SnapNames to GoDAddy.
Rightside’s market cap before the announcement was $158 million. Unless Rightside can quickly grow its revenue from new top level domain names–something that seems unlikely–I can’t imagine it remaining a public company for long. It’s also worth noting that Donuts previously offered $70 million for Rightside’s registry business. Add the $70 and $83.5 million, and you basically get the market cap.
The eNom business was very low margin. It also depended heavily on Namecheap, which represented 28% of domains under management.
It will be interesting to see what major shareholders do in the wake of this transaction. Investor J. Carlo Cannell previously argued that the company should sell off or invest less in its new top level domain portfolio. The company has essentially done the opposite.