By @NY Staff
Domain name registrar Register.com has completed its $17 million acquisition of online intellectual property company Virtual Internet plc, a deal that gives the Silicon Alley company a leg up in the European market for a new top level domains such as .pro.
As part of the acquisition, the New York-based Register.com gets Virtual Internet’s equity stake in RegistryPro, a joint venture formed by the two companies to capitalize on the .pro domain registry for certified professionals.
“Our acquisition helps Register.com capitalize on growing market opportunities that further strengthen our corporate business model,” said Register.com’s CEO Richard Forman in a conference call Wednesday morning.
“We look at the coming years as the right time to invest in this business” of new TLDs.
The deal, announced on February 1, values the UK-based Virtual Internet at about $12 million pounds, or US $16.9 million. Virtual Internet’s current cash position is at over $8 million and Register.com’s net cash payment is less than $9 million.
The company said as part of the acquisition, certain Virtual Internet plc shareholders elected to receive $8.4 million worth of loan notes in exchange for their shares. They bear interest at a floating rate of LIBOR minus 1 percent.
The deal also includes Virtual Internet’s Net Searchers, an internet naming and copyright monitoring service that tracks domain registrations, copyright searches and tracks infringement on company brands. Register.com said it anticipates offering several of Net Searchers’ brand protection services right away and that Net Searchers would add $10 million in revenues for the remainder of the year.
Registry Pro is slated to launch in late summer.
“This deal is a perfect fit with our strategy of increased participation in the premium domain name services market,” Forman said.
“Net Searchers’ Web auditing and domain name monitoring capabilities will also enhance Register.com’s current suite of corporate products and services.”
During a conference call to discuss the acquisition, Register.com also updated its guidance on revenues for the first quarter and full year due to the Registry Pro acquisition.
It expects overall revenues for 2002 to come in 5 percent higher than expected, between $120 million and $125 million, despite an anticipated decline in revenues as it pays for the Virtual Internet acquisition and incurs higher sales, marketing, research and administrative costs as part of the purchase.
For the first quarter, revenues are expected to come in between $26 million and $27 million with earnings per share of between 8 and 10 cents.
Register.com also said its Web hosting lines of business, such as the hosting pitch that accompanies its Web Site Now site-building feature, are taking longer to ramp up than had been anticipated and that it was evaluating that line of business.
Shares of Register.com closed unchanged Tuesday at $8.56 before the closing was announced. Its 52-week trading range is $5.15 and $15.50.
