(By Anya George Tharakan, Reuters) — Endurance International said on Monday it would buy online marketer Constant Contact in deal valued at about $1.1 billion to expand beyond its traditional Web-hosting business.
The deal will add Constant Contact’s online marketing tools such as email marketing, events management and social media integration to Endurance’s portfolio of Web-hosting software for small and medium-sized businesses.
Endurance, whose brands include BigRock, HostGator and FatCow.com, already has an agreement to provide Constant Contact’s email marketing tools to its subscribers.
Constant Contact was founded as “Roving Software” in 1995 in an attic in Brookline, Massachusetts. Its shares tanked in April after it reported dismal subscriber additions.
Endurance’s offer of $32 per share in cash represents a 22.6 percent premium to Constant Contact’s close on Friday, but is well below the stock’s record-high of $43.18 in August.
Constant Contact’s shares were trading at $31.75 in early trading on Monday. Endurance slipped 11 percent to $11.82.
Constant Contact targets small businesses and non-profit organizations, offering them colorful templates to advertise products through emails.
Endurance, which also reported results on Monday, said on its post-earnings conference call that talks around the acquisition had started late last year.
The company, which was called BizLand before the dot.com bust, now has over 3 million subscribers. With the deal, it expects boosting its paying subscribers to over 5 million.
Endurance lowered its adjusted revenue forecast for 2015 to $745 million-$750 million, below the average analyst estimate of $751.9 million, according to Thomson Reuters I/B/E/S.
It had previously forecast adjusted revenue of $745 million-$755 million.
The deal is expected to close in the first quarter of 2016. Constant Contact will operate as a separate brand.
Goldman Sachs, Credit Suisse and Allen & Co were financial advisers for Endurance, while Morgan Stanley and Raymond James advised for Constant Contact.
(Reporting by Anya George Tharakan in Bengaluru; Editing by Ted Kerr and Saumyadeb Chakrabarty)
How startups are scaling communication: The pandemic is making startups take a close look at ramping up their communication solutions. Learn how