Small business, CSPs, Mergers and Acquisitions

GoDaddy Confirms Host Europe Group Acquisition, $1.79B SMB Buyout

Blake Irving
Blake Irving

GoDaddy is acquiring Host Europe Group (HEG) for $1.79 billion, expanding the company's push into small business hosting across the globe. The deal is valued at roughly 11 times EBITDA (earnings before interest, taxes, depreciation and amortization), including annual synergies from the deal. GoDaddy also is making a deeper push into WordPress managed services and accelerating its channel partner program efforts.

HEG is on track to generate approximately US$328 million in bookings and approximately US$139 million in adjusted EBITDA in 2016, the companies said.

Rumors about GoDaddy potentially buying HEG have been circling since November 2016. HEG had been the largest privately-owned web services provider in Europe, supporting small businesses and web experts. The company served 1.7 million customers ahead of the sale. GoDaddy has expanded its international business to 56 global markets over the past four years, according to CEO Blake Irving.

Still, GoDaddy apparently doesn't plan to keep all of HEG. The parent is exploring exploring "strategic alternatives" for HEG's PlusServer managed hosting business, including a possible sale, GoDaddy said. The reason: PlusServer targets larger, more mature companies that require a dedicated field sales force and account management. That portion of the business is expected to generate approximately US$92 million in bookings and US$41 million in adjusted EBITDA in 2016. At an 11 times EBITDA, the PlusServer business segment could be valued at roughly US$450 million.

GoDaddy Evolution: SMB and Channel Moves

Instead of competing head-on against traditional hosting providers and cloud giants like Microsoft Azure and Amazon Web Services, GoDaddy has specifically focused on SMB opportunities. The company has been particularly attentive to web developers, while also showing the WordPress content management community lots of love.

Eric Thomas

Indeed, GoDaddy also acquired WP Curve in recent days, a self-funded and profitable WordPress developer shop. According to the WP Curve blog:

"We first met with GoDaddy’s hosting team in June 2016. We shared details about the WP Curve model, our team and exactly what we’ve done to get where we have. We quickly agreed that WP Curve services would be a great fit for GoDaddy’s customers. WP Curve complements GoDaddy’s expanding WordPress offering including Managed WordPress and the recent ManageWP addition. Like WP Curve, GoDaddy is known for its stellar customer care and they are committed to supporting customers and helping get problems solved. Alex has worked closely with the GoDaddy team to build the transition plan. We’ve made a ton of progress that we can’t wait to share in the coming months."

Meanwhile GoDaddy has also shifted Eric Thomas to VP of business development and reseller channel. Thomas previously was CEO of FreedomVoice, a VoIP and cloud voice company that GoDaddy acquired in May 2016.

More M&A: Track all VAR, MSP and CSP mergers and acquisitions by visiting the ChannelE2E Milestones section each day.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.