Thursday 22nd November 2018

Parent company of Bluehost and HostGator reportedly considering sale

Endurance International Group is reportedly considering the possibility of a sale following the acquisition of Web.com by Siris Capital Group earlier this year. The Group posted a net loss of $2 million on revenue of $279 million for Q2 2018. It was also recently handed an $8 million penalty by the SEC.
Jason Smith
by on 27th August 2018

Endurance International Group, the parent company of a number of hosting brands including HostGator, Bluehost, Just Host and iPage, is considering the possibility of a sale, according to a report in Bloomberg.

The sources, who requested to remain anonymous because they aren’t authorized to speak publicly, claim a discussion about the organization’s future was sparked following the sale of Web.com to Siris Capital Group for $2 billion in June.

They also claim a decision is yet to be made and that EIG could remain a publicly traded company.

EIG was acquired by Accel-KKR, an investment firm, for $975 million in 2011; it subsequently went public in 2013.

It has made a number of acquisitions in recent years, including email marketing platform Constant Contact for $1.1 billion in 2015 and domain aftermarket BuyDomains, as well as two other companies, for $77 million in 2014.

It also acquired AppMachine, an easy-to-use app building platform, for $37.5 million in 2016.

The group reported a net loss of $2 million on revenue of $278.8 million for Q2 of 2018. In its quarterly results it also reported a year-on-year decline in total subscribers, from 5.2 million in June 2017 to 4.9 million in June 2018.

The rumors about a potential sale appear to have had little effect on its share price, which currently stands at $9.60.

EIG was also recently handed an $8 million penalty after the U.S. Securities and Exchange Commission (SEC) found it had “fraudulently inflated subscriber counts and revenue per subscriber numbers”.

The SEC also found that, prior to being acquired by EIG, “Constant Contact inflated its subscriber numbers in a ploy dubbed “Save Program’”.

Through this program, the SEC claims Constant Contact’s employees were encouraged to offer free services to customers considering cancelling their subscriptions so it “could keep the customers on the rolls as active subscribers”.

Meanwhile, the sale of Web.com in June prompted legal firm WeissLaw to launch an investigation into whether the deal represents value for its shareholders.

As a consequence of the sale, investors received $25 per share however WeissLaw points to numerous analysts valuing a share as high as $32.

We’ve reached out to Endurance International Group for comment and will update this report if we receive a response.