Mergers
and Acquisitions - The Current MO
Stocks
are yo-yoing, jobless rates are still climbing, and the word
"recession" is getting thrown around more than a ball at a
Beach Boys' concert. Despite the spurts of hard times in the
technology industry, it remains imperative for companies to
plan for the future; and judging from recent news, the future
is now.
HostIndex.com has spoken to several people in the know who
have said the amalgamation of hosting companies will be the
norm; in order to survive, hosting companies will need to
pair up or be left alone to suffer.
Software, professional services and managed service provider,
divine inc. announced it will acquire Data Return, a leading
managed hosting services provider. The stock-for-stock deal
is valued at about $33 million dollars. Chicago, IL-based
divine said the deal means it will achieve profitability by
the second quarter of 2002.
And that's just one of the examples.
<%getBannerByGroup("bottom_main")%>
Express
Technology, which already operates two hosting brands, announced
it had purchased "certain assets of Digital Chainsaw", and
will be bringing the company and its 6000 customers into the
Express Technology family. Express currently parents HalfPriceHosting,
a Windows-only hosting company, as well as CFXHosting, which
deals strictly with those wishing to use ColdFusion applications.
In these tough economic times, companies can be purchased
for bargain prices compared to the inflated markets of yesteryear.
For hosting companies looking to expand into markets they
currently do not serve, acquisitions are a very viable alternative
to starting from scratch.
In late October, Interland announced it had acquired the
small business-focused shared and unmanaged dedicated retail
Web hosting business of Interliant. Though the terms of the
deal were never disclosed, it does solidify the onward-focus
that while today, hosting companies seem to be a dime a dozen,
tomorrow, they could be pairing up in an effort to stay alive,
and profitable. In 2002, Interland also picked up several more companies including CommuniTech.Net and Dialtone Internet.
"On October 29, Interland announced that we would acquire
the small-business focused shared and unmanaged dedicated
customer accounts of Interliant, Inc.," Joel J. Kocher, Interland's
chairman and CEO, said.
"The transaction includes only the purchase of accounts
and does not include the purchase of data center infrastructure.
This is a critical point. I'll explain why.
The Web hosting industry currently is undergoing a major
shakeout and consolidation. This can be attributed to the
unnatural level of capital infusion during the Internet boom,
which resulted in too many players and an overcapacity of
infrastructure and data center space. Many Web hosts now are
saddled with debt at a time when funds are no longer flowing
from the capital markets.
Now, Interland is seizing this opportunity. We have an efficiency-driven
business plan and we can leverage our strong cash position
to acquire customer accounts as other players exit the business.
And, by acquiring only customer accounts and the associated
revenue, we can more rapidly achieve the scale and operating
efficiencies needed to accelerate our drive to cash flow profitability.
The acquisition should be immediately accretive to our gross
margins as we quickly integrate these customers into our existing
operations."
|
