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XYZ’s win-win $5 million proposition for 4 Rightside TLDs

Negari wins even if Rightside doesn’t take the deal.

New TLD company XYZ offered $5 million for four of Rightside’s (NASDAQ:NAME) new top level domain names today. Whether Rightside accepts the offer or not, its CEO Daniel Negari will walk away a winner.

Negari made the offer for .army, .dance, .dentist and .vet in a very public way on his blog.

He personally owns 2.7% of Rightside’s outstanding shares, and XYZ COO Mike Ambrose owns roughly the same amount. They would like people to see value in Rightside’s new TLD portfolio.

In his blog post, Negari noted that part of the reason for his offer was to “highlight the tremendous value Rightside’s registry component holds.”

So even if Rightside rejects his offer, he might benefit from a higher valuation of the company.

(Shares in Rightside were down slightly today even though he announced the offer during trading hours. He filed his offer with the SEC after the markets closed.)

But don’t assume this is merely a stunt to push Rightside’s stock higher. I think Negari really wants to buy these domains. So if Rightside accepts the offer or doesn’t, Negari wins.

Another interesting aspect of this offer is that another large shareholder will push Rightside to accept the deal.

J. Carlo Cannell, who owns over 7% of Rightside through funds he manages, has demanded that Rightside stop putting so much emphasis on new TLDs. He even labeled two of the TLDs Negari has offered to buy, .Dance and .Army, “substandard”. I doubt that Negari’s selection of these two domain names was a coincidence.

If it were up to Cannell, I bet he’d jump at the chance to sell these domains for $5 million. The four domains in the offer have fewer than 15,000 registrations combined.

Rightside released a statement:

Rightside received an unsolicited offer to purchase certain of our new gTLD registries on Wednesday, March 30, 2016. We will consider this proposal in the ordinary course of business. We do not anticipate commenting further about this matter publicly.

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  1. Ryan says

    Could this be a ploy to pump up rightsides stock price, slippery slope SEC does not like this kind of stuff.

  2. S. Brady Alliy says

    I am surprised at the apparent lack of due diligence or market research that went into the purchase of many GTLD extensions.

    I personally invested a lot of time and money and effort in developing brands and infrastructure to accommodate new GTLDS aftermarket activity.

    Either the pre launch activities were lax or perhaps based on false research numbers or perhaps hopeful estimates.

    As I watch the caterpillar that is the GTLD program crawl along I keep telling myself there must be some hidden merit that even after 20 years in the domain industry I am not seeing. Certainly they have a solid consumer education and strong marketing budget and plan to justify the investment I rationalized. And still we wait for the unveiling. The registries I think were driven by the hope of riding the a nascent industry with unbelievable upside, Huge gamble based it seems mostly on speculation that is so far not produced results.

    Some registries like .club with an attractive extension, multiple obvious buyers and a solid management and marketing plan and talented and committed team IMO have found their way to success. Others like .xyz have produced registrations using what appears to be highly creative certainly non traditional marketing IMO. But to date and overall the GTLD effort has been a huge bust as witnessed by the lackluster registration numbers revealed in this article.

    The GTLD story is not ending but IMO has a beginning that is certainly worth forgetting. Sounds like some early GTLD investors agree.

    Not sure if talk of another round is continuing but see little reason to do so from a market demand or apparently ROI value standpoint.

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