Endurance International Group this morning announced it willacquire all the stock of email marketing company, Constant Contact. The price forConstant Contact’s stock will be $32 per share, making the value of the deal $1.1 billion.
Together, as a combined group, they will serve more than5 million small businesses.
Endurance International (NASDAQ: EIGI) operatesa variety of website hosting brands, including BlueHost, Hostgator, A Small Orange and iPage. In addition to hosting companies, it also owns and operates the Typepad blogging platform, the Homestead website building tool, and the Mojo Marketplace of premium WordPress plugins andadd-ons, as well as some other brands.
Constant Contact (NASDAQ: CTCT) is best known for its email marketing software. In recent years it has branched out with online survey tools, social media marketing tools, and other marketing applications.
The Boards of Directors of both companies have approved the deal. The deal now needs various legal approvals. It is anticipated to close in the first quarter of 2016.
Both companies are publicly traded and listedon the NASDAQ. The acquisition price of $32 per share is substantially higher than the $26.10 per share that Constant Contact’s share price closed at on October 30, 2015, the last day of trading before this announcement.
It’s double the price of Constant Contact’s stock at its IPO debut in 2007.
Gail Goodman, the CEO of Constant Contact, told usshe is delighted by the deal. “It definitely exceeded my expectations. I couldn’t be more excited to take the Constant Contact team on this journey,” she told us in an interview this morning.
Two Companies Already Serving Small Businesses Together
The companies are no strangers to one another. Both are headquartered in the Boston area. Goodman said she has known the CEO of Endurance International through professional networking circles. “Our roots go way back. As early as 1999, when Endurance International was still called BizLand, we were part of a CEObreakfast group,” Goodman said.
That networking connection eventually led thetwo companies to enter into a business partnership about a year ago. The arrangement involved joint marketing of Constant Contact products with Endurance’s BlueHost, Hostgator and iPage products.
“About nine months ago we started to see the benefits of working together. Eventually it became clear that while we were doing great in that joint marketing arrangement, we could do even more if the two companieswere closer together,” Goodman added.
That led totoday’s acquisition announcement.
Endurance International in the past has keptit* brands separate. Consistent with that approach, Goodman anticipates that Constant Contact will keep its brand identity.
Perhaps even more important than brand identity is that she anticipates the core values toward serving small businesses will remain the same. “When we put the value statement of Constant Contact next to the value statement of Endurance International Group, the number one value is exactly the same. It’s ‘customers first’,” Goodman added.
Goodman acknowledged that Constant Contact has had other corporate suitors over the years. “For us it was about finding apartner thatwas a good fit culturally. Our BHAG (big hairy audacious goal) is to revolutionize the success formula for millions of small businesses. Together with Endurance International we can meet thatgoal.”
She anticipates Constant Contact’s 650,000 customers willsee no changes.
“It’sbusiness as usual as far as customers are concerned,” Goodman assured us.
By combining with Endurance International, Constant Contact will be able to reach more small businesses earlier in their life cycle, said Goodman. That willhelp small businesses become more successful, she believes.
“Historically Endurance International has reached small businesses a bit earlier in their life cycle than Constant Contact,” Goodman said.
Bycombining the two companies, Goodman said they have the potential tohelp small businesses start building a customer contact list from day one, instead of later. That customer contact list is crucial to marketing success, sheadded.
Hari Ravichandran, president and chief executive officer of Endurance, said, “We know that once small businesses have a web presence, they look for other products and services that will help them to grow their business. We see an opportunity to help our growing subscriber base meet their goals through an integrated suite of solutions, and we are excited to add this talented team to our roster.”
Goodman plans to stay around around for six to nine months, at least until the deal is finally closedand through a transition period. She estimates it will take three to four months just to get necessary legal approvals and close the deal.
Goodman will not be taking on an operating role with the combined venture. “It’s time for me to move on to the next stage of my career journey,” she told us.
It hasn’t been decided yet who will be in charge of running the Constant Contact brand after the deal closes.
But Goodman didn’t soundconcerned. “I’ve built a very strong pool of executive talent here at Constant Contact,” she said.
Image: Endurance International/Small Business Trends
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