Minds + Machines Group to sell assets to GoDaddy subsidiary
Shares in(MMX ) soared on Thursday after the group said it has agreed to sell the majority of its assets and transfer its rights and obligations to Registry Services LLC, a subsidiary of US web hosting group GoDaddy, for US$120m in cash.
The domain registry company said the sale represents an estimated net asset value of 8.8p per share, a 92% premium to MMX’s closing price on Wednesday. Addressing investors, it said there is ‘strong strategic rationale’ to sell to a large, established player in the industry.
MMX was approached by GoDaddy Registry back in December 2020 who expressed an interest in making an all cash offer to acquire the Business and Assets. The Board was then considered the approach from GoDaddy Registry as part of its broader strategic review.
The Group said this recent review reinforced the view of the Board that the business has ‘strong recurring cash flows’ but expects limited opportunity for material organic growth beyond the Company's AdultBlock services without ‘fundamental changes’ put in place.
Consequently, MMX said it needs to consider one of three options: a multi-year transformation, further inorganic growth and/or pursuing additional revenue opportunities outside the core business in order to effectively leverage its relatively high fixed costs.
Shares in Minds + Machines Group soared by 59.78% to 7.35p following the announcement that it has agreed to sell the majority of its assets to the US web domain group for $120m.
The group said it has received irrevocable undertakings in favour of the sale of assets at around 64% of the current issued ordinary share capital of the company. In addition, CEO of the Group, Tony Farrow, highlighted that the Board recommends the sale to investors.
"The Board has continually sought to grow the business both organically and via acquisition to maximise the inherent operational gearing of its fixed overheads, but without significant capital investments, we expect our growth to be in-line with the TLD industry generally.”
The organic growth of the Company is likely to remain in low single digit percentages for the foreseeable future. The risks of identifying and concluding further acquisitions together with the expansion into unproven revenue streams need to be considered against participating in the ongoing consolidation in the TLD industry,” commented Farrow.
He added, “The Board was able to consider the approach from GoDaddy Registry as part of its broader strategic review and following a period of robust negotiation and extensive due diligence the Board is pleased to announce and recommend the proposed Sale for a total consideration of $120 million in cash."
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