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Register.com Dips into Domain Reselling Well

Register.com Inc. Friday bulked up its registrar service by acquiring domain name reseller Afternic.com for about $49.4 million in stock and cash.

Register.com will issue 4.38 million shares of common stock and pay $10 million in cash. The sum of the transaction, which should close today, is derived from register.com's stock price of $9 per share.

register.com hopes to explode on to the domain name reselling sector, an area in which it did not have a strong hold. Considered a burgeoning second wave market, more and more people are coughing up registered domains, which can fetch millions of dollars.

Once the deal closes, register.com will add Afternic's ability to value domain name assets, place automatic bids and track auction activity. Ultimately, users will have a one-stop source for domain name services.

Register.com already provides individuals, businesses and ISPs with a suite of domain name services, including registration, renewal, management. By picking up Afternic.com, it has snatched a chunk of a popular new market. Though it had already held domain names in escrow, register.com now may offer Afternic's 800,000 names in auction to go with its 80,000 members.

Register.com spokesperson Shonna Keogan told InternetNews.com Friday her firm made the play in response to huge customer demand for domain resales. Keogan, whose company has competed firmly with Network Solutions Inc. when the U.S. government deregulated the playing field, said she wasn't sure what register.com's rivals will think of the deal.

"What it does is marry our buyers with Afternic's sellers," Keogan said.

Michael Mann, whose BuyDomains.com specializes in offering buyers far fewer domain names -- only 17,000 -- than rival Afternic, told InternetNews.com Friday the deal is nice for the parties.

Mann said that while the firms have beautiful sites and oodles of names to choose from, not all of the names are quality names.

"A lot of them are names that somebody bought for $50, and they turn around and sell them for $100,000," Mann said.

Mann, who said register.com may not be done with its buying spree, believes selling better names at more reasonable prices is the way to go.

Afternic.com will become a wholly-owned subsidiary of register.com. All Afternic.com employees will be offered positions with this subsidiary.

Jon Whelan, co-chief executive officer of Afternic, is being named managing director of Secondary Market Development & Sales. Chris Maroney, Co-CEO of Afternic.com, is being appointed managing director of Secondary Market Operations.