Melbourne IT sells domain-name division
Online services provider Melbourne IT has sold its Digital Brand Services division for $152.5 million to US-based Corporation Services Company.
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