July 2 (Bloomberg) -- Go Daddy Group Inc., the website registration and hosting company, announced a deal with KKR & Co., Silver Lake Partners and Technology Crossover Ventures, or TCV, that values the company at $2.25 billion, said a person with knowledge of the matter.
Bob Parsons, founder and chief executive officer, will keep a minority stake in the company, said the person, who declined to be identified because the financial terms of the deal weren’t disclosed. Go Daddy, based in Scottsdale, Arizona, is teaming up with the firms because of their “technology expertise,” according to a statement yesterday on its website.
KKR, Silver Lake and TCV are aiming to benefit from growth in the Internet, using Go Daddy’s predictable revenue stream to expand and pay down debt taken on to finance the transactions. Go Daddy registers domain names and hosts websites for as little as $5 a month, and has more than 48 million domain names under management.
“We’re just at the beginning of the Internet in terms of all the additional services a registry can sell to companies,” said Lou Kerner, managing director of the private-shares group at Wedbush Securities Inc. in New York, before the announcement.
Silver Lake, which has offices in New York and Menlo Park, California, focuses on technology investments, and led the 2009 buyout of Skype from EBay Inc. KKR, the New York-based firm run by Henry Kravis and George Roberts, buys companies across industries.
Go Daddy has sought to raise its profile in recent years by running provocative ads during the Super Bowl featuring race-car driver Danica Patrick. Capital from new owners might help it reach a broader range of potential clients, including small and medium-sized businesses that need help running sites, Melanie Posey, an analyst with IDC in New York, said June 24 when talks between the company and the buyout firms were disclosed by a person with knowledge of the discussions.
“The domain-name business is an onramp that gives us the opportunity to cross-sell other products,” said Herald Chen, a director at KKR who helped negotiate the deal. “Additional services is an area of growth.”
Before founding Go Daddy, Parsons taught himself computer programming and started Parsons Technology in 1984 while working in his basement, according to his website. A decade later, he sold Parsons to Intuit Inc. for $64 million, the website says.
Go Daddy projects revenue will be about $1.1 billion this year, compared with $139.8 million in 2005. When Go Daddy filed for an initial public offering in 2006, it reported a net loss every year from 2001 through 2005.
Parsons said in a conference call after the announcement that Go Daddy is now generating a profit. He will become executive chairman and Warren Adelman, currently the president, will take over as CEO. The deal will be financed with 40 percent debt, he said.
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