There are few bigger names in the web hosting world than GoDaddy. As they announce their intention to buy European web services company, Host Europe Group (HEG), for around $1.8 billion, we analyze the who, the how, and why of the deal. Is GoDaddy moving away from their original domains and hosting positioning, to become something bigger? How will it affect users of both companies, and the industry as a whole?
The Facts
GoDaddy has announced that they are purchasing Host Europe Group (HEG) for around $1.8 billion. This total is made up of €605 million which will be going to Host Europe Group shareholders, and €1.08 billion in taking on HEG’s debt. The deal makes sense because both firms have similar customer base profiles and strong brands.
Who is Host Europe Group?
Host Europe Group (HEG) are the largest privately owned web services provider in Europe, specializing in domain names and hosting. They have 1.7 million customers across the continent, managing around 7 million domains. Their brands include 123Reg, Domain Factory, and Heart Internet. Since 2013 it has been owned by Cinven, the international private equity firm. It was reported that a number of telecom firms and private equity companies, including Deutsche Telekom, had been interested in buying HEG before GoDaddy closed the deal.
Who is GoDaddy?
GoDaddy, based in Scottsdale, Arizona, is the world’s largest domain name registrar, managing more than 63 million domains, from 14.5 million customers worldwide. Their core market is the SME sector. They’re famous for their bright green livery, and their prominent marketing. Until last year, they sponsored a NASCAR team, and their Super Bowl ad for 2017 featured a man who called himself ‘The Internet’. Recently, however, GoDaddy has looked to diversify their services as well as expand into new territories. They’ve done this largely through acquisitions.
GoDaddy’s Spending Spree
The HEG deal, expected to close in the second quarter of 2017, caps of an aggressive round of acquisitions for GoDaddy. In December 2016 they announced plans to buy WP Curve, a provider of WordPress services. In September 2016, they bought a Serbian WordPress startup, ManageWP, and integrated their WordPress management tools into their GoDaddy Pro proposition. This round of acquisitions started in May 2016 when they purchased Encinitas, a cloud-based telephony service.
GoDaddy’s Goals
GoDaddy’s plan is to become a one-stop-shop for small business web services. They previously have been there at the beginning of the small business journey, when SME’s buy their web domains and take tentative steps into hosting. Now they have added web management tools, cloud-based services, and marketing into their offerings.
GoDaddy clearly has plans to expand further into international territories. While GoDaddy is already prominent in the UK, where they have registered 25% of the country’s domains, the HEG deal gives them a big presence in Germany, France, Spain, and the rest of Europe.
Outside the Web Hosting Space
HEG owns the World Hosting Day and NamesCon conference brands. They are important events in the global web hosting community calendar. GoDaddy says they will continue to operate these brands after the takeover, so if you attend these events, expect some GoDaddy trademark pizzazz next time.
The View from the Top
Google chief executive, Blake Irving, was thrilled with the deal saying, “By joining forces with HEG, we accelerate our expansion into Europe with the delivery of a broader range of cloud-based products, built on a single global technology platform, and supported by unparalleled customer care to help small businesses and web designers succeed online.”
Group CEO of HEG, Patrick Pulvermuller, also welcomed the deal, saying, “In combining with GoDaddy, we see a remarkable opportunity for our customers, partners and the small business ecosystem in Europe.”
What Customers Can Expect
While the finer details of the deal, and how the brands’ integration will work, are yet to be disclosed, users can reasonably expect to see some changes. HEG runs many strong web hosting brands across Europe, but customers may expect to see the bright green of GoDaddy on their account statements soon. You would also imagine that GoDaddy will be offering their services over and above web hosting, such as online marketing, cloud-based tech, and SEO optimization, to their new European customer base soon.
The deal between GoDaddy and Hosting Europe Group cement GoDaddy’s ambition to be the biggest name in the web services industry. It dramatically adds to their customer base in Europe and offers them a lucrative opportunity to sell more products and services. Time will tell if this is the end of their acquisitions. One thing is clear. GoDaddy doesn’t want to be just a domain names and hosting company anymore.
