Web hosting giant acquired by private equity firm, sparking legal battle

hosting
(Image credit: Shutterstock / metamorworks)

As rumored last month, web hosting giant Endurance International Group (EIG) has been sold - but not to VPN specialist J2 Global as expected.

The owner of well-known web hosting and best website builder brands such as Hostgator, Domain.com, Bluehost, Constant Contact and Resellerclub was worth around $859 million last month, but private equity firm Clearlake has agreed to pay a significant premium and handle the enormous outstanding debt.

In total, the all-cash deal is valued at $3 billion, putting the price of Endurance at $1.34 billion (a near 64% premium) and outstanding debt at $1.66 billion.

EIG deal

Not all parties are happy with the sale, however. Given the fact that EIG shares are on a steep upward trajectory - having risen by 541% since March - some shareholders feel the business was actually under-priced.

Shortly after the announcement, litigation law firm Brodsky & Smith LLC announced it will investigate potential claims against the EIG Board of Directors for “possible breaches of fiduciary duty and other violations of federal and state law in connection with the agreement to be acquired by Clearlake Capital Group”.

The investigation will look into “whether the Endurance Board breached its fiduciary duties to shareholders by failing to conduct a fair process and whether Clearlake is paying too little for the company”.

Over the past two decades, EIG has acquired dozens of brands and its approach to onboarding web hosting companies has often been controversial. It missed the boat when website builders took off, which explains why GoDaddy, Wix and Weebly all have market capitalizations far higher than EIG’s.

Desire Athow
Managing Editor, TechRadar Pro

Désiré has been musing and writing about technology during a career spanning four decades. He dabbled in website builders and web hosting when DHTML and frames were in vogue and started narrating about the impact of technology on society just before the start of the Y2K hysteria at the turn of the last millennium.

Latest in Website Hosting
A cloud symbol imposed over a bank of servers in a data center.
What is cloud hosting and who needs it?
Dark web scanning on a laptop
Hostinger integrates dark web scanning into hPanel
WordPress
WordPress Foundation bid for greater trademark control halted, adding to more legal setbacks for CEO Matt Mullenweg
The PebbleHost website.
PebbleHost review
An image of the Cloudways Copilot logo
AI managed web hosting: I spoke to Cloudways about its new tool and the benefits artificial intelligence brings to servers
SPanel
As cPanel increases prices SPanel's improved compatibility could shake up the web hosting world order
Latest in News
ExpressVPN mobile app and Aircove
ExpressVPN ‘reduces workforce’ for the second time in two years
The Nanoleaf PC Screen Mirror Lightstrip being used on a desktop computer.
Mac gaming could get an intriguing boost – but not in the way you'd expect
Snapdragon G Series
Qualcomm poised to muscle in on AMD's territory with powerful gaming handheld processors
Student sat at a desk with a laptop in a dormitory looking at a mobile phone
Windows 11 could eventually help you understand how fast your PC is - as well as offer tips for making your PC or laptop faster for free
Veresa attacks an enemy in Genshin Impact.
Genshin Impact Version 5.5 arrives next week, adding a new five star character obsessed with food
Google Pixel 9a
Google just launched the Pixel 9a – and I reckon it embarrasses the iPhone 16e