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Endurance(EIG) Kicks Off $225 Million Credit Facility For HostGator
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Endurance(EIG) Kicks Off $225 Million Credit Facility For HostGator

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Comments

  • TazTaz Member

    N9ooooo9ooooo

  • It's hidden behind a paywall can you summarize what's going on, Hostgator is selling out?

  • laaevlaaev Member

    I am as clueless as you are right now, follow this WHT thread: http://www.webhostingtalk.com/showthread.php?p=8193790

  • One of the hosts I used was bought by EIG, Me and my domain got out of there real fast.

  • taiprestaipres Member
    edited June 2012

    I've spoken to ex-hostgator employees and current ones, apparently internally they've had a lot of issues, and don't treat their staff right, so I can't really say i'm shocked they're selling(this hasn't been confirmed yet), just saying if they are. I'm happy I use VPS's now, and can distance myself from HostGator.

  • taiprestaipres Member
    edited June 2012

    Someone said EIG is acquiring bluehost...so maybe they're making a grab for lot of shared hosting real estate?

  • @Jack said: @taipres I had a few friends who hostgator locked there account due to CPU usage did that ever happen to you?

    nah, but I always tried to optimize things to be gentle as I could on the CPU, the node I 'm on seems pretty generous on that anyway but IDK for sure. Hard to get the cpanel monitor to show high usage. It doesn't surprise me they locked your friends account though.

  • I find it a good thing, figure 10% of hostgator's customers leave, which means more customers for everyone else.

  • TaylorTaylor Member

    @FRCorey said: I find it a good thing, figure 10% of hostgator's customers leave, which means more customers for everyone else.

    It world be good if you went out of business, more customers for everyone else.

  • rskrsk Member, Patron Provider

    @Jack said: @taipres I had a few friends who hostgator locked there account due to CPU usage did that ever happen to you?

    On bluehost, they just limit your CPU usage, which is more preferable than getting your full account "locked"... XD

  • subigosubigo Member

    Good. I love watching HG clients squirm.

  • Ok looks like a false alarm

    "Indeed, EIG also wants to acquire HostGator, but HostGator CEO has refused with their generous quoted price, so if you’d like to move your website to HostGator, you don’t need to feel worry about with the acquisition any more and you can use the coupon code “25Promotion” to save 25% cost with HostGator immediately for the first billing order."

    http://www.webhost4lifereview.com/is-netfirms-sold-out-already/

  • Actually considering this is new and EIG is raising money, they may indeed be selling :(

  • earlearl Member

    If they are the same company that bought out Netfirms, you can expect a really big price increase in domain renewals.. that is if you have domains with hostgator..

  • "EIG (Enduarance International Group) is not a web hosting company, but EIG is the owner of many famous web hosting companies, such as iPage, FatCow, Justhost, HostClear, EasyCGI, iPower, Powweb, Dot5Hosting, Webhost4life.. There’re more than 30 brands are owned by EIG at present. In recent months, EIG has acquired another 2 world famous web hosts – Bluehost and HostMonster."

  • laaevlaaev Member
    edited June 2012

    Well I just called the number on http://www.enduranceinternational.com/endurance/contact-us.bml (866-897-5421) and they said they are not acquiring HostGator. Maybe the guy I spoke to doesn't know yet, time will tell if this is true or not.

    Thanked by 1William
  • sonicsonic Veteran

    Endurance, a provider of website hosting, is preparing to launch a $225 million credit facility backing its acquisition of Hostgator, according to a person with knowledge of the deal.

    Lead bank Credit Suisse will hold a lender conference call Wednesday at 10:30 a.m. EST.

    The facility comprises a $100 million first-lien term loan B priced at Libor plus 625 bps, with a 1.5% Libor floor and an offer price of 98 cents on the dollar; and a $125 million second lien priced at Libor plus 950 bps, with a 1.5% Libor floor and a 98-cent offer price.

    The terms of the transaction also include 101 soft-call protection until April 2013 on the first lien, meaning that if the loan is refinanced before that date, investors will receive a premium of 1% of face value. Soft-call protection on the second lien extends four years at 103 in the first year, 102 in the second year, 101 in the third year, and par in year four.

    The Burlington, Mass.-based company currently holds a B1 rating from Moody’s Investor Services and a B rating from Standard & Poor’s.

    A provider of online solutions for small and medium-sized businesses, Endurance serves close to 1.8 million customers through more than 30 distinct hosting brands, according to its website.

    Houston-based Hostgator provides shared, reseller, virtual private server and dedicated web hosting, according to its website. It was founded in 2002 by Brent Oxley, now the company’s chairman, who started Hostgator from his dorm room at Florida Atlantic University.

  • raindog308raindog308 Administrator, Veteran

    You would not need $225 million to buy Hostgator.

    They have "over 8 million domains," but a lot of those are parks and redirects. Even if they had 1,000,000 paying customers at $5/month, that's only $60 million a year gross. No one would give Hostgator a high growth multiple because they are not going to be high growth. Yes, the hosting market continues to grow, but it's not like a startup that might grow 100x in the next five years.

  • taiprestaipres Member
    edited June 2012

    @raindog308 said: You would not need $225 million to buy Hostgator.

    They have "over 8 million domains," but a lot of those are parks and redirects. Even if they had 1,000,000 paying customers at $5/month, that's only $60 million a year gross. No one would give Hostgator a high growth multiple because they are not going to be high growth. Yes, the hosting market continues to grow, but it's not like a startup that might grow 100x in the next five years.

    You're forgetting their VPS and dedi plans, as well as their assets, which aren't cheap. They also maybe throwing in the VOIP company Hostagor owns IDK. And it's very common for companies to value a company based off what they've grossed since they've existed, or at the very least the last few years. I have no idea what they're basing the value on, it could easily be projection growth. Is sad regardless.

  • raindog308raindog308 Administrator, Veteran

    @taipres said: You're forgetting their VPS and dedi plans, as well as their assets, which aren't cheap.

    True, but I was also using a ridiculously high customer count. HG doesn't have 1,000,000 customers or anything near that.

    Oh look, they say they have 7,000 servers.

    http://support.hostgator.com/articles/pre-sales-policies/how-many-servers-does-hostgator-have-and-where-are-they-located

    @taipres said: And it's very common for companies to value a company based off what they've grossed since they've existed, or at the very least the last few years.

    Mmmm...maybe for red-hot startups, but most companies are valued based on their free cash flow, or possibly an asset sale/breakup price though that isn't the case here.

    Put it this way...any investor worth is salt is going to want at least the long-term stock market average return (10.5%) + a substantial premium for risk. Let's say a 20% return, and don't forget they're borrowing money which means they have to cover the cost of interest. For $225 million, they would want to be able to extract $50-60 million a year from HG, and that's after money reinvested for growth, maintenance, etc.

    I'm skeptical HG is that big or the margins are that rich.

    Then again, I don't really know...just speculating.

  • CloudxtnyHostCloudxtnyHost Member, Host Rep

    Normally companies are bought for 3x yearly revenue. So I'd suggest they have around $75m revenue per year give or take and as someone has said earlier they'll have a large amount of assets!

  • GallusGallus Member

    @httpzoom,

    3x yearly revenue does not say much. $75m revenue with a profit of 1% is not worth $225m....

  • CloudxtnyHostCloudxtnyHost Member, Host Rep

    @Gallus, I understand but thats just the way business acquisitions work.

    If it was only making 750k per year out of 75m income then they are doing something very wrong and no one would want to buy the business.

    The valuation would be based on their capitalisation rate and based on that an income multiplier would be used.

  • GallusGallus Member

    @httpzoom

    That is the nice thing about rule of thumb: It's not a law...

  • miTgiBmiTgiB Member

    @httpzoom said: someone has said earlier they'll have a large amount of assets!

    What assets? They lease all their servers.

  • CloudxtnyHostCloudxtnyHost Member, Host Rep

    Leasing servers is very different than renting. Most lease agreements involve a minimal payment at the end of the lease term to "purchase" the server.

    The reason they are done in this way is its much better for the balance sheet and tax purposes.

  • miTgiBmiTgiB Member

    @httpzoom said: The reason they are done in this way is its much better for the balance sheet and tax purposes.

    Any buyout at lease end, other than fair value, is treated as a purchase from day one in the US and must be depreciated instead of expensed. Few leases have a buyout clause of anything other than fair value at lease end, so the lease may be expensed.

  • CloudxtnyHostCloudxtnyHost Member, Host Rep

    @miTgiB exactly that's why I said a minimal payment rather than a $1 payment or something like that!

  • miTgiBmiTgiB Member

    @httpzoom said: hat's why I said a minimal payment

    I don't think minimal and fair value are equal unless that is what you are trying to say and just picked a different word.

  • CloudxtnyHostCloudxtnyHost Member, Host Rep

    Well it just depends on how long they run the leases for.

    Minimal for me means as little as possible.

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