GoDaddy in exclusive talks to buy peer Host Europe Group

US website hosting services provider GoDaddy is in exclusive talks to buy peer Host Europe Group (HEG) as part of its plan to expand in higher-margin businesses, Reuters yesterday reported, citing people close to the matter.

A successful deal would help GoDaddy accelerate its shift into the more profitable web hosting business as well as broaden its customer base in Europe, the report said.

HEG, one of Europe's largest independent web hosting firms, was earlier put up for sale by its owner private equity firm Cinven, but the process was put on hold following the UK's June vote to leave the European Union.

HEG, which serves mainly small and medium-sized businesses, could be valued at about €1.7 billion ($1.8 billion), or over 12 times its forecast 2016 core earnings of €140 million, the report added.

The company, which is registered in the UK and has a large customer base in Germany, had received interest from German Internet service provider United Internet AG and Deutsche Telekom AG prior to the Brexit vote.

GoDaddy, backed by private equity firms KKR and Silver Lake, has outbid rival like United Internet, which had teamed up with private equity firm Warburg Pincus, and buyout firm Centerbridge, while Deutsche Telekom this month withdrew from the bidding process, Reuters said.

HEG, which was acquired by Cinven in 2013 for £438 million, has 1.7 million customers and control over nine data centers in the US and Europe.

The Arizona-based company is the world's largest website hosting services provider with more than 61 million domain names under management.