Public offer comes after Rightside declined earlier offers.
Donuts announced today that it’s making a $70 million offer to acquire Rightside’s (NASDAQ:NAME) new top level domain name business.
The company is making the offer public after “Rightside has repeatedly disregarded” Donuts’ previous overtures, Donuts said in a press release.
The goal of making the offer public, I imagine, is to put shareholder pressure on Rightside.
Rightside investor J. Carlo Cannell has asked the company to divest some of its underperforming TLDs and focus on its registrar business. His call for other shareholders to join him hasn’t caught on, with most shareholders voting for the company at its last shareholder meeting.
Earlier this year, XYZ made an unsolicited offer to acquire four Rightside top level domain names for $5 million.
On the face of it, $70 million might represent a nice return for Rightside. Before acquiring .games, it had spent a net $16 million to acquire its 39 top level domains. But the company has invested substantially in marketing and behind-the-scenes operations, including setting up its back-end registry. Donuts uses Rightside’s registry platform, and I imagine it would be part of the acquisition.
Rightside has a market cap of $176 million.
If it were to sell the new top level domain assets, it would retain its registrar platforms (eNom and Name.com), its portfolio of about 300,000 domain names as well as half of NameJet.
Rightside and Donuts have been close partners in addition to the back-end registry relationship. They had an arrangement for a basket of top level domains that they divvied up according to a complicated schedule.
Don’t know much about valuing a registry business. That seems like too much money though. 🙂
Taryn, don’t sell !!!
Andrew Allemann says
My big concern is that is sure seems that Rightside does a lot more grassroots marketing of new TLDs than Donuts does. I think this is important for the future of new domains.
Andrew Allemann says
…on the plus side, Donuts could unlock the ridiculous number of domains Rightside has market as premium.
Eric Lyon says
I hope this doesn’t mean that Rightside is preparing to be acquired or liquidated. Downsizing isn’t always an indicator of that though. It could simply be that they are stretched too thin and need to lighten the overhead a bit.
Max Menius says
In regard to $70 million to spend, my first thought is for Donuts to invest a substantial portion of that into promoting the gtld’s they already have to businesses worldwide, i.e. do everything imaginable to bring their existing tld’s into greater public awareness. I am concerned that acquiring more tld’s from another company will only dilute efforts to effectively market the ones they already have.
There is a problem with so many tld’s having hit the market. There have been no big splashes, only tiny ripples – even with .xyz. Stakeholders and new tld registrants need for registries to make a full on persistent effort: frequent press releases to industries, attending industry-specific conferences, ubiquitous blogging in multiple venues, selective ad spends, actively pursuing TV/media appearances (like Negari did).
I will give Mason Cole of Donuts heavy duty props for opposing the hit job that Jeannie McPherson did on new tld’s at CircleID. I felt her post there was a rather intellectually dishonest attempt to misinform the public on new gtld’s. So thanks to Mason for responding to her unfounded criticisms.
Mason Cole says
Thanks Max. As I said in comments, it’s a tired and worn out set of arguments. Appreciate the compliment.