Tucows Inc. Acquires Wholesale Domain Registrar Ascio Technologies
19 March 2019 - 10:00PM
Tucows Inc. (NASDAQ:TCX, TSX:TC), a provider of network access,
domain names and other Internet services, announced that it has
signed a definitive agreement to acquire wholesale domain name
registrar Ascio Technologies from CSC®. The transaction closed
yesterday.
Tucows will pay $29.44 million and the transaction is expected
to be immediately accretive to operating cash flow. The purchase
price will be funded through Tucows’ existing credit facility.
The acquisition of Ascio adds approximately 1.8 million domains
under management and approximately 500 active resellers. The Ascio
reseller base fits squarely with Tucows' core customer profile --
ISPs, web hosting companies and website builders serving quality
businesses that reward outstanding customer service with long-term
loyalty.
Ascio also expands Tucows’ product portfolio with one of the
most complete offerings of country code TLDs (ccTLDs) and generic
TLDs (gTLDs) in the world.
Jørgen Christensen, Managing Director of Ascio commented, “This
deal is all about focus. We wanted to find a buyer who would focus
on our resellers so that CSC can focus on managing brands for the
biggest and best companies around the world.”
“This acquisition makes perfect sense for Ascio’s resellers, our
business and our shareholders,” added David Woroch, Tucows’
Executive Vice President of Domains. “Ascio’s resellers get a
customer-focused provider that is investing in its wholesale
channel. Tucows gets an excellent business with a deeply
experienced team, additional domain products, including more than
50 ccTLDs, and a high-quality customer base that strengthens our
European presence. And our shareholders get the benefit of
Tucows’ even greater scale and efficiency as the world’s largest
wholesale domain registrar.”
The contribution from this transaction, based on a partial year
and transaction costs, was contemplated in the 2019 guidance
provided by Tucows on February 13, 2019. Pre-acquisition, the
Ascio business generated approximately $4 million of annual
EBITDA. Tucows is required to apply acquisition accounting to
the assets and liabilities acquired, including fair valuation of
the acquired deferred revenue balance, which will lower the
reported Adjusted EBITDA1 contribution in the first approximately
one year period following the acquisition. The acquisition is
expected to provide synergies over the next 12 to 18 months which,
along with the inclusion of full year financial results, is
expected to generate an internal rate of return and multiple that
are in line with Company benchmarks.
About AscioAscio Technologies was founded in
1999, and is an accredited domain registrar under the Internet
Corporation for Assigned Names and Numbers with approximately 1.8
million domains under management. Ascio is a part of the family of
brands under CSC.
About CSCCSC is the world’s
leading provider of business, legal, tax, and digital brand
services to companies around the globe. From keeping businesses in
compliance and streamlining operations, to protecting and promoting
brands online, CSC uses its expertise and personal approach to help
businesses run smoother. CSC is the business behind business. It is
the trusted partner for 90% of the Fortune 500®, more than 65% of
the Best Global Brands (Interbrand®), nearly 10,000 law firms, and
more than 3,000 financial organizations. Headquartered in
Wilmington, Delaware, USA, since 1899, CSC has offices throughout
the United States, Canada, Europe, and the Asia-Pacific region. CSC
is a global company capable of doing business wherever its clients
are—and it accomplishes that by employing experts in every business
it serves. Learn more at https://www.cscglobal.com.
About Tucows Tucows is a provider of network
access, domain names and other Internet services. Ting
(https://ting.com) delivers mobile phone service and fixed Internet
access with outstanding customer support. OpenSRS
(http://opensrs.com) and Enom (http://www.enom.com) manage a
combined 23 million domain names and millions of value-added
services through a global reseller network of over 37,000 web hosts
and ISPs. Hover (http://hover.com) makes it easy for individuals
and small businesses to manage their domain names and email
addresses. More information can be found on Tucows’ corporate
website (http://tucows.com). Tucows, Ting, OpenSRS, Enom and Hover
are registered trademarks of Tucows Inc. or its subsidiaries.
Notes:
1. Adjusted EBITDA
Tucows reports all financial information required in accordance
with United States generally accepted accounting principles (GAAP).
Along with this information, to assist financial statement users in
an assessment of our historical performance, the Company typically
discloses and discusses a non-GAAP financial measure, adjusted
EBITDA, in press releases and on investor conference calls and
related events that exclude certain non-cash and other charges as
the Company believes that the non-GAAP information enhances
investors' overall understanding of our financial performance.
The Company believes that the provision of this supplemental
non-GAAP measure allows investors to evaluate the operational and
financial performance of the Company’s core business using similar
evaluation measures to those used by management. The Company uses
adjusted EBITDA to measure its performance and prepare its
budgets. Since adjusted EBITDA is a non-GAAP financial
performance measure, the Company’s calculation of adjusted EBITDA
may not be comparable to other similarly titled measures of other
companies; and should not be considered in isolation, as a
substitute for, or superior to measures of financial performance
prepared in accordance with GAAP. Because adjusted EBITDA is
calculated before recurring cash charges, including interest
expense and taxes, and is not adjusted for capital expenditures or
other recurring cash requirements of the business, it should not be
considered as a liquidity measure. Non-GAAP financial measures do
not reflect a comprehensive system of accounting and may differ
from non-GAAP financial measures with the same or similar captions
that are used by other companies and/or analysts and may differ
from period to period. The Company endeavors to compensate for
these limitations by providing the relevant disclosure of the items
excluded in the calculation of adjusted EBITDA to net income based
on U.S. GAAP, which should be considered when evaluating the
Company's results. Tucows strongly encourages investors to
review its financial information in its entirety and not to rely on
a single financial measure.
The Company’s adjusted EBITDA definition excludes depreciation,
amortization of intangible assets, income tax provision, interest
expense, interest income, stock-based compensation, asset
impairment, gains and losses from unrealized foreign currency
transactions and infrequently occurring items, including
acquisition and transition costs. Gains and losses from unrealized
foreign currency transactions removes the unrealized effect of the
change in the mark-to-market values on outstanding unhedged foreign
currency contracts, as well as the unrealized effect from the
translation of monetary accounts denominated in non-U.S. dollars to
U.S. dollars. Contact: Lawrence Chamberlain
Loderock Advisors (416) 519-4196
lawrence.chamberlain@loderockadvisors.com
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