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2006-05-30
Web.com Buys WebSource
Web.com Acquires WebSource, Deal Expected to Boost Earnings, Add $9 Million Per Year in Revenue
ATLANTA (AP) -- Web hosting company Web.com Inc. said Tuesday it has acquired WebSource Media LLC, a privately-held Web services provider, in a move to expand and diversify its business.
The announcement sent Web.com shares up 30 cents, or 5.5 percent, to $5.75 shortly after the beginning of trading on the Nasdaq.
The addition of WebSource is expected to boost Web.com's revenue by $9 million a year and boost earnings, while also adding 22,000 subscribers.
Except for assumed liabilities and debt payments, the cost of acquisition will be based on WebSource's profitability as part of Web.com over the next three years.
Under the agreement, the Houston-based company's former owners can earn up to 1 million shares of Web.com common stock and up to $8.2 million in cash, if the business meets certain revenue growth and profitability goals over the three-year period, Web.Com said.
The former owners also can earn up to 500,000 more shares and warrants for the purchase of up to 1 million shares at a price of $6 per share, if the business exceeds those targets.
Web.com will also provide about $2.6 million in cash to pay certain transaction fees and outstanding working capital obligations.
Kaufman Bros. LP acted as financial adviser to WebSource on the deal.
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