CentralNic (LON:CNIC) is buying privately-owned domain name registrar, Instra Group, funded in part from a £10mln placing of stock with investors at 40p a share, for almost £16mln (A$33mln).
According to the press release “the purchase will extend CentralNic’s capabilities and “significantly increase” its retail offering.”
According to the press release Instra in the year to June 30 posted pre-tax profits of just over £1mln (A$2.1mln) on turnover of £7.11mln (A$14.8mln).
CentralNic chief executive Ben Crawford is quoted as saying:
“The addition of the new business, which is robust and global, will lift the firm’s revenue base by 70%.
Through services like instra.com and asiaregistry.com, Instra Group has made it possible for businesses to secure their domain names in every major country in the world, as well as under new top-level domains, including in Arabic, Chinese, Japanese and Russian.
I have travelled the world looking for cutting edge companies to acquire, and Instra stood out among all the others.
“Many of the savviest businesses around the world are already using Instra as their one-stop shop for online brand protection.”
Instra offers three main services: domain portfolio registration for large corporates; domain names and web site hosting for small businesses; and a white label sales platform.
Desleigh Jameson, Instra’s CEO, is expected to join the CentralNic Board following completion of the acquisition.
In trading today in London CentralNic closed down over 20% to 45P today.
CentralNic Placing Annoys Private Investors
https://sharesoc.wordpress.com/2015/12/08/centralnic-placing-annoys-private-investors/
This morning (8/12/2015), CentralNic Group announced the acquisition of Australian company Instra Group. Total cost is AU$33 million payable in cash and shares which will be supported by a mixture of debt and the issuance of new shares in a placing. Overall the new shares to be issued to the sellers and to institutional investors will represent 31% of the new overall equity so there is substantial dilution of existing investors taking place.
But what is likely to annoy private investors is that the new shares are being issued in the placing at 40p which is a discount of about 30% to the recent market trading price. Only institutional investors will be able to participate as is quite common with such placings – there is no “open offer” in this case.
Both CentralNic and the company they are acquiring (which is profitable) sell internet domain names. There is no doubt business logic in this combination and the price being paid does not seem unreasonable. Placings which exclude private investors are annoying even if they are necessary to conclude a deal quickly. But those done at a hefty discount are particularly objectionable.
Shareholders who wish to complain could go along to the General Meeting required to approve this deal. But as it is scheduled for the 29th December, not many investors are likely to turn up.
The writer is a holder of shares in CentralNic.