KeyDrive reverses into CentralNic in $55 million deal
Source: Domain Incite, July 16, 2018. http://domainincite.com/23183-keydrive-reverses-into-centralnic-in-55-million-deal
CentralNic this morning confirmed that it has signed a deal to merge with KeyDrive to dramatically grow its market share in the registrar and registry markets.
The deal, technically a reverse takeover, is worth up to $55 million, $10.5 million of which is performance-related.
KeyDrive is the holding company for brands including the registrars Key-Systems, Moniker and BrandShelter and the registries OpenRegistry and KSRegistry.
It is by far the bigger player in the registrar space. The combined company will have 7.1 million domains under management, 5.8 million of which will come from the Luxembourg-based firm.
“The acquisition of KeyDrive is transformative for CentralNic, significantly increasing the Company’s scale and giving it significant extra firepower in the domain name industry to rival the traditional major players,” CentralNic CEO Ben Crawford said in a statement.
CentralNic says the deal will make it the 11th-largest registrar in terms of gTLD domains under management and the fifth-largest registry back-end in terms of TLDs managed (which will hit 118).
KeyDrive had 2017 revenue of $58.26 million and adjusted EBITDA of $5.87 million. Operating profit was $4.3 million.
CentralNic had 2017 revenue of £24.3 million ($32.2 million), adjusted EBITDA of £6.6 million ($8.7 million) and operating profit of £1.8 million ($2.4 million). These numbers do not include the £3.2 million-a-year SKNIC business, which CentralNic acquired right at the end of last year.
KeyDrive CEO Alexander Siffrin will become COO of CentralNic and one of its largest shareholders, owning 16.4% of the combined company’s shares.
The acquisition itself is fairly complex.
CentralNic will raise $16.5 million cash in a share placement and it will issue $19.3 million of shares to a holding company majority-owned by Siffrin. The remaining $10.5 million is performance related and may be paid in a combination of cash and shares, mostly shares.
It’s all subject to shareholder approval at an August 1 general meeting.
Assuming the deal closes, CentralNic says its plan is to become the “GoDaddy of Emerging Markets”, though what this means in practice is not immediately clear.
It does seem that there will be some job losses as the company rationalizes staffing across its various locations.
As far as technical integration goes, CentralNic’s registrars will migrate to KeyDrive’s platform and KeyDrive’s registries will migrate to CentralNic’s registry platform.
The potential for a deal was first revealed in March, after a leak. Trading in its shares was halted as a result, but resumed this morning.