Ben Crawford, CEO of CentralNic, said:
“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. KeyDrive’s values and reputation within the industry match CentralNic’s. The acquisition makes strong strategic sense to CentralNic and is a leap forward towards becoming a global leader.
“I am looking forward to welcoming the management and employees of KeyDrive to the CentralNic Group. Alex Siffrin will add further weight and industry expertise to the Company’s management team as Group Chief Operating Officer, and having taken a significant equity stake as part of the deal, clearly shares our confidence in the prospects of the enlarged group.”
CentralNic Group Plc (LON:CNIC), the internet platform that derives revenue from the worldwide sales of internet domain names and associated web presence services, announced that it has entered into a conditional agreement to acquire the entire share capital of KeyDrive S.A. and its subsidiaries for an initial consideration of $35.8 million, representing an enterprise value of $44.5 million, plus a performance based earn out of up to $10.5 million.
KeyDrive is a global technology business that operates in the domain name services industry. KeyDrive develops and operates software platforms used for selling subscription-based tools for businesses to operate online, including domain names, hosting, email, domain portfolio management and online advertising services. In the year to 31 December 2017, KeyDrive generated revenues of $58.26 million and adjusted EBITDA of $5.87 million.
Acquisition Highlights
· The Acquisition will substantially increase CentralNic’s scale and product range, adding KeyDrive’s strength in the domain reseller and corporate services market to CentralNic’s existing expertise in the domain registry and retail registrar segments
· The Directors believe that opportunities for both cost and revenue synergies exist, which the Board expects to be realised as the two businesses are integrated
· The Enlarged Group will rank as the 11th largest domain name registrar globally by gTLD volume, and be among the top five registry service providers by number of registry clients
· The Consideration for the Acquisition comprises:
o $16.5 million in cash funded from the Placing proceeds
o The issue of 28,006,607 Consideration Shares, valued at $19.3 million at the Placing Price to Inter.Services S.A, a holding company whose largest shareholder is Alex Siffrin, CEO of KeyDrive
o A performance-based earn-out of up to $10.5 million, a minimum of 15 per cent of which shall be settled in cash and up to 85 per cent of which may be settled by the issue of additional consideration shares at the prevailing market price
· The Placing comprises the issue of 46,153,847 new Ordinary Shares at a price of 52 pence per share, a 10.3% per cent discount to the closing middle market price of 58 pence per share on 13 March 2018, the last business day before trading in the shares was suspended pending an announcement regarding a reverse takeover
· The Acquisition constitutes a reverse takeover under the AIM Rules and is therefore conditional on obtaining shareholder approval at the General Meeting scheduled for 10:00am on Wednesday 1st of August 2018. At the General Meeting a number of other resolutions will be proposed, which will include, inter alia, resolutions to authorise the issue of the Placing Shares and the Consideration Shares.
· CentralNic has secured irrevocable commitments to vote in favour of the resolutions to effect the Acquisition and the Placing to be proposed at the General Meeting in respect of 31,017,273 Ordinary Shares, representing 32.14 per cent of the Existing Ordinary Shares. The Company has also received a binding commitment from Kestrel partners LLP to vote in favour of the resolutions to effect the Acquisition and Placing in respect of a total of 18,086,593 Ordinary Shares, representing 18.7 per cent of the Existing Ordinary Shares.
· The Admission Document relating to the Acquisition, the Placing and the proposed Readmission of the Enlarged Share Capital to trading on AIM is available on the Company’s website, www.centralnic.com, and will be posted to shareholders later today. The Admission Document includes a notice of the General Meeting that will be held at the offices of CMS Cameron McKenna Nabarro Olswang LLP, Cannon Place, 78 Cannon Street, London EC4N 6AF on 1 August 2018 at 10.00am. at which shareholder approval for, inter alia, the Acquisition and the Placing will be sought
· The suspension of trading in CentralNic’s Ordinary Shares will be lifted at 8:00am today, immediately following publication of the Admission Document
Alex Siffrin, CEO and Founder of KeyDrive, said:
“Both companies bring complementary strengths and added depth across the various web disciplines and that is very rare in the domain name and web services industry. We share a vision and a passion to deliver the very best products and solutions to the market and to become one of the leading organisations in our industry. I am looking forward to working closely with my new colleagues in pursuit of that goal.”
