In a deal worth around £50 million ($65.2 million), UK digital retailer and technology company The Hut Group has acquired UK hosting provider UK2.
Who is The Hut Group?
The Hut Group is a prominent tech company, primarily a digital retailer, with a huge presence in the health and beauty sectors. The Hut Group owns websites including GrowGorgeous, IdealShape, and Myprotein. They’re hugely popular sites, fast-growing with strong revenue models. As a result, The Hut Group is one of the UK’s tech success stories.
The Hut Group was founded in 2004 by Matt Moulding (Chief Executive), and John Gallemore. It was first established as a retail technology platform provider, which it still is, providing back end eCommerce services to companies such as Nintendo, Unilever, and Honda. In 2006, however, it shifted its focus towards building its own sites.
Shareholders of The Hut Group include Sir Terry Leahy, famous for running the UK’s biggest supermarket group, Tesco. Richard Pennycook, former Chief Executive at The Co-op Group also holds a stake. The leading private equity firm, Kohlberg Kravis Roberts, holds a 19.2% share.
The Hut Groups profits for 2016 measured £50 million ($65.2 million), up 67% from 2015. They employ 3,000 people in the UK, and we can expect that figure to double by 2019.
Who is UK2?
Founded in 1998, UK2 (UK-2 Limited), is one of the UK’s leading web hosting companies. They own several web hosting brands, including 100TB and MidPhase. They provide hosting and dedicated shared services to a global client base of SMEs and larger corporations. They also deal in data analytics, shared hosting, and domain registration.
UK2 is the pride of the UK’s web hosting industry, employing more than 200 people across 26 locations throughout the world, including London, Hong Kong, and Brazil.
Since 2011 they have been partially owned by LDC, the buyout division of UK banking giant Lloyds Banking Group.
Why Did The Hut Group Buy UK2?
On the surface, it appears that there isn’t a huge amount of synergy between the two parties, an up-and-coming digital retailer and a global hosting company. However, The Hut Group have retained a small interest in their provision of technology division that they were founded upon.
Incorporating UK2’s more advanced technology into this division enhances The Hut Group’s offering in this sector. The Hut Group harbors ambitions to become a big player in the technology provision sector, and buying UK2 is a big step towards this. They plan to employ an extra 1,000 people in this sector over the next 3 years.
They will now be able to offer web hosting services to the corporations that they already provide eCommerce services to. These corporations include DMGT, Nintendo, Unilever, Nectar, Honda, and Elizabeth Arden.
The acquisition will boost the online infrastructure powering their health and beauty retail brands. The Hut Group will be able to move all of their brands to their new web hosting company, saving on costs, boosting capacity, speed, and reliability.
Acquiring UK2’s global footprint will also help The Hut Group expand their retail empire into new territories.
If you’re a current customer of UK2, The Hut Group wants to keep your business and improve the services they provide, so there’s nothing to worry about on that score.
Quietly and gradually, The Hut Group is building a British technology brand to rival the giants of the US. They certainly don’t plan to stop with this acquisition, and it’s easy to imagine we’ll be reporting similar news stories to you soon.
The next step for The Hut Group may be an IPO to finance new acquisitions. Speculation has long been rife in London, and with profits growing as fast as they are, the time might be right.
Either way, The Hut Group are ones to watch, and we look forward to keeping you updated on their fortunes.