Melbourne IT sells domain-name division
The DBS division provides domain name registration and management services, online brand protection and consultancy services to large global organisations.
Melbourne IT said the sale price was equivalent to 95 per cent of Melbourne IT's market capitalisation before the DBS sale.
"The sale achieves the Melbourne IT board's stated objective of its strategic review to unlock shareholder value by realising the intrinsic value of its businesses," the company said.
Net proceeds from the sale are expected to amount to $135 million to $140 million.
After paying debts of $US35 million ($A34.2 million), Melbourne IT said it would consider a range of capital management options.
Chief executive Theo Hnarakis said the DBS division had not been specifically earmarked for sale but given the value provided by the transaction, the opportunity had to be taken.
He said the DBS division had been performing well, making about $9.5 million in profits last year, and had been expected to be a high-growth business in the future.
"The offer was around $150 million, close to our market capitalisation at the time of the approach, and literally for a third of our business," Mr Hnarakis said. "It made it a very difficult offer to refuse."
The Melbourne IT board believed that the value of the DBS business had not been adequately reflected in Melbourne IT's share price, he added.AAP
Frequently Asked Questions about this Article…
Melbourne IT sold its Digital Brand Services (DBS) division to US-based Corporation Services Company for $152.5 million.
The DBS division provided domain name registration and management, online brand protection and consultancy services to large global organisations.
Melbourne IT said the sale price was equivalent to 95% of the company’s market capitalisation before the DBS sale, and the offer was close to the company’s market cap at the time of the approach.
Net proceeds are expected to be about $135 million to $140 million. After paying debts of US$35 million (about A$34.2 million), Melbourne IT said it would consider a range of capital management options.
CEO Theo Hnarakis said the DBS division had not been specifically earmarked for sale, but because the offer valued roughly a third of the business at an amount close to the company’s market capitalisation, it was a difficult offer to refuse. The board also said the sale met its strategic objective of unlocking shareholder value.
Melbourne IT reported the DBS division made about $9.5 million in profits last year and had been expected to be a high‑growth business moving forward.
The board believes the sale realises the intrinsic value of the DBS business, addressing a gap between that value and the company’s share price. With net proceeds available, shareholders may see outcomes from the capital management options the company decides to pursue.
The article only states that the DBS division—which handled domain registration and brand protection for large organisations—was sold. It does not provide details on Melbourne IT’s remaining operations or any other domain services they may retain.
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