Web.com announced Wednesday that it will buy Herndon-based Network Solutions for $405 million in cash and an equity stake, creating the largest provider of domain-name registration and Web services for small businesses.
Network Solutions is the latest in a string of Washington area firms that have been snapped up in recent months. Providence
Equity Partners has made back-to-back purchases of the government contracting firm SRA International and Blackboard, a provider of online education services, for $1.9 billion and $1.64 billion, respectively.
Web.com and Network Solutions offer similar services helping small businesses to register domain names, set up Web sites, and add e-commerce, social media and other tools. Network Solutions has taken a do-it-yourself approach; Web.com has done the work itself.
“You combine those two companies, [and] you have a complete end-to-end solution set that can work for anyone in the small-business market, including those who haven’t gotten on the Internet or don’t have time to do it themselves,” said David Brown, chief executive of Jacksonville, Fla.-based Web.com.
The goal is to become a large anchor in the market so that
small and medium-size businesses, which are embracing the Internet in greater numbers, will navigate toward the company.
“We’re seeing a heck of a lot more small businesses adopting Web services,” said Network Solutions chief executive Tim Kelly. “It creates meaningful scale at a time when there is lots of growth.”
The combined company is projected to generate $450 million in revenue this year, and it will have about 3 million paying subscribers. It will also count 9 million domain names under management and more than 1,900 employees worldwide. Last year, Web.com acquired another domain registrar, Register.com, for $135 million.
Network Solutions started in 1979 as an engineering firm but during the dot-com days became one of the main registries for Web sites. The company has gone public and been acquired many times, most recently in 2007 by the private-equity shop General Atlantic.
When the Web.com acquisition closes this fall, pending shareholder and regulatory approval, General Atlantic and other Network Solutions shareholders will own about 37 percent of the combined company. Web.com said it plans to issue 18 million shares of common stock to Network Solutions shareholders.