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GoDaddy to Buy Host Europe Group

Acquisition expected to help accelerate GoDaddy's international expansion

The New York Stock Exchange on GoDaddy shares' first day of trading in April 2015. The company has announced its largest-ever acquisition.
The New York Stock Exchange on GoDaddy shares' first day of trading in April 2015. The company has announced its largest-ever acquisition. Photo: Richard B. Levine/Zuma Press

GoDaddy Inc. announced its largest-ever acquisition, a deal to buy Host Europe Group and combine the two companies' internet-services businesses to help accelerate GoDaddy's international expansion.

The Arizona-based vendor of website services on Tuesday said it would pay €605 million (about $641 million) to HEG's owner—private-equity firm Cinven—and assume net debt of €1.08 billion.

HEG, a London-based company with similar offerings, comes with about 1.7 million customers, most of them in Germany and the U.K. GoDaddy Chief Executive Blake Irving said HEG—like his company—is extremely attentive to the web needs of small businesses. “They are completely aligned with what we are doing,” he said.

GoDaddy, which is 19 years old, built its business by supplying internet domain names—a business promoted through racy Super Bowl ads and celebrities like race driver Danica Patrick. It has branched out into related online services for small businesses, including hosting their websites, offering customized email address and website-creation tools.

Some of the changes were pushed by Mr. Irving, who joined GoDaddy in 2013 after stints at Microsoft Corp. and Yahoo Inc., where he served as executive vice president and chief product officer. He led GoDaddy's initial public offering in April 2015; the company's stock has risen more than 70% above its IPO price. The stock traded closed at $34.74 on Monday, up 4%.

GoDaddy reported in November that revenue rose 15% to $472.1 million in the third quarter. It already operates in Europe, including Germany and the U.K., but matching HEG's presence in those countries “would take us over five years,” Mr. Irving said.

HEG was purchased in 2013 by Cinven for about £438 million (about $678.9 million). The company, which also sells domain names and hosts websites, has grown lately through a series of acquisitions. It has nine data centers and serves customers in Europe from offices in the U.K., Germany, France, Spain and Romania.

HEG is on track in 2016 to generate approximately $328 million in bookings and $139 million in earnings excluding interest, taxes, depreciation and amortization, GoDaddy said.

GoDaddy said financing for the transaction has been committed by its existing lenders at interest rates similar to the company's existing term loan.

Mr. Irving said GoDaddy talked to HEG in 2013 about a potential acquisition but concluded that his company's technology and operations weren't ready. Now, he said, GoDaddy should be able to take over operation of HEG's services as well as its own.

GoDaddy prides itself on its telephone customer support, not only to tackle technical problems but also to suggest additional services for customers to buy, Mr. Irving said. HEG also has a strong service operation, he said, and it could benefit by adding a sales element.

HEG Chief Executive Patrick Pulvermüller will lead the combined company's European operations. GoDaddy said it plans to explore options such as a sale for HEG's PlusServer business, which serves larger companies through a direct sales force. GoDaddy and HEG mainly use direct sales over the web to reach small businesses.

GoDaddy said the deal, subject to customary regulatory requirements, is expected to close in the second quarter of 2017.

Reuters reported last month that GoDaddy was in exclusive talks to buy HEG.

Write to Don Clark at

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