Jacksonville-based company agrees to an acquisition by Siris Capital Group and will keep its name and its Jacksonville headquarters.
Web.com Group Inc. agreed Thursday to a $2 billion buyout by a private equity firm that will keep the company headquartered in Jacksonville, with its operations mainly intact.
Affiliates of New York-based Siris Capital Group LLC agreed to pay $25 per share in cash to buy the company, which was founded in Jacksonville in 1999 as Website Pros Inc.
The company said in an employee communication Thursday that the new owners intend to keep the name Web.com, which has become a high profile brand since it became the main sponsor of the PGA Tour’s second-level golf tour in 2012.
That notice also said Web.com’s plans to move into a new 218,000-square-foot headquarters building under construction at 5379 Gate Parkway are not changing.
That building, called Town Center Two, is scheduled to open in spring 2019.
“This transaction will provide shareholders with immediate and substantial cash value, while also providing us with a partner that shares in our commitment to customers and employees and can add strategic and operational value,” Web.com CEO David Brown said in a news release.
Brown was not available for additional comment Thursday.
“Siris looks forward to nurturing Web.com’s core domain business, supporting and anticipating the diverse needs of the company’s customers, and driving new opportunities for innovation and growth,” Siris Executive Partner Robert Aquilina said in the news release.
Web.com said it had about 1,000 Jacksonville employees when it announced the new building in November, but the company said in March it eliminated a “small percentage” of jobs, without giving any figures.
Web.com’s annual report said it had 3,600 total employees at the end of 2017, with additional offices in eight U.S. cities and in Canada, Argentina and the United Kingdom.
The employee notice said no immediate changes are anticipated in executive management from the buyout, and also said “we do not anticipate the day-to-day operations of the company to immediately change.”
The agreement with Siris is subject to a “go-shop” period until Aug. 5 in which Web.com could seek higher offers.
Wall Street apparently sees that as a possibility, as the stock rose as high as $26 Thursday after the $25-a-share agreement with Siris was announced.
The stock closed at $23.20 Wednesday, but Web.com said the $25-a-share price is a 30 percent premium above its average price over the last 90 days.
The stock was trading in the upper teens a month ago, but began rising as activist fund Starboard Value LP began buying shares.
Starboard said in a June 8 Securities and Exchange Commission filing it has acquired 9.4 percent of Web.com’s stock, leading to speculation it would push the company toward some type of transaction.
In the news release, Brown said the company had been talking to Siris for two months.
BWS Financial analyst Hamed Khorsand set a price target of $32 for the stock after Starboard’s investment was revealed. In a research note Thursday, Khorsand said that price is based on the possibility of a “strategic peer” buying Web.com, not a private equity firm like Siris.
“A private equity firm is not likely to achieve the same level of cost savings as a strategic acquirer would, hence the lower takeout price,” he said.
Website Pros was founded to design websites for businesses. It went public in 2005 and expanded with acquisitions to provide additional marketing services for businesses.
The acquisitions included a 2007 deal to buy an Atlanta-based company called Web.com, and it adopted that name.
The company reported revenue of $186.7 million and net income of $4.6 million in the first quarter this year.
City Council Vice President Aaron Bowman, who becomes president July 1, said it was “great to see a homegrown company be wanted so much and targeted as a valued asset.”
“It sends a message to the world that Jacksonville is a place to grow a company and has the labor force to serve it well,” Bowman said.