Dreamscape Networks forks out $8.5M for Domain Name Registrar

Dreamscape Networks (ASX:DN8) has struck a deal to acquire the customers, systems, and brand assets of Domain Name Registrar for $8.5 million.

The publicly-listed domain registration, hosting and online solutions provider, which owns Crazy Domains, told shareholders on 19 June that it had entered into a binding agreement for the assets of the domain registrar, which trades under the Domain Registration Services brand.

Indeed, the assets are being acquired from the privately held Domain Registration (Australia) Pty Ltd.

According to Dreamscape Networks, Domain Name Registrar's principal focus is domain registration and web hosting, with approximately 80 per cent of the company's business coming from domain registration and 20 per cent from hosting.

For Dreamscape Networks, the deal sees further consolidation in the domain registration and hosting space, with the company already having undertaken a number of multimillion-dollar acquisitions to build its already substantial presence in the market.  

Dreamscape Networks told shareholders that Domain Name Registrar fits into its existing infrastructure in Sydney, and is expected to be fully integrated by 30 September 2018.

"The acquisition of Domain Name Registrar (DNR) allows us to further consolidate our .au domain position in the Australian market," Dreamscape Networks' managing director  and CEO Mark Evans said. "It will also allow us to take further advantage of our existing infrastructure and the synergies of our previous Australian acquisitions.

"DNR is a very established domain registrar and is highly respected in the industry, having been one of the first registrars. Our integrations team is preparing for a full integration of the business into our Dreamscape infrastructure within 90 days of acquisition.

"We are looking forward to welcoming the DNR customer base to Dreamscape and utilising our upgraded technology platforms to enhance customer experience and product diversity for these customers," he said.

The new acquisition is expected to generate around $2.5 million of revenue and $1.5 million pro forma pre-tax earnings (EBITDA) in the 2018 financial year.

Subject to satisfying the customary conditions precedent and the payment of the purchase consideration, the acquisition is expected to be completed on or about 1 July 2018.

In February, Dreamscape Networks revealed plans to close at least two of its offices and consolidate other parts of its operational footprint, as it worked to minimise mounting costs.

"The decrease in the underlying result is due to an increase in 1H18 costs (relative to 1H17) and continued weak conditions in the Australian domain and hosting pillars," the company told shareholders at the time.

"The lower earnings have been amplified as a result of the corresponding period costs reflecting Dreamscape as a private company and therefore not including any comparative costs as a public company,” it said.