Endurance International, a company that offers a variety of web services including virtual private server (VPS) hosting, has just added another feature to their stable. The company bought Constant Contact for over $1.1 billion, or $32 per share. It happened simultaneously as Endurance experienced a record low in the stock market, and it’s hopeful that scooping up the popular Constant Contact software will get Endurance back on the right track. According to reports, the acquisition was funded with $735 million in proceeds from a loan along with $350 million in unsecured notes.
Bloomberg confirmed the loan withdrawal that had been earmarked for the acquisition. However, Endurance has gone on record saying that Constant Contact will continue to be traded under CTCT on Nasdaq for a few days post-acquisition. Endurance’s own stock was down two percent to $23.49 the day the takeover took place. At the same time, CTCT stock was up more than four percent.
Why Constant Contact?
Endurance is already spread pretty thin when it comes to offering a smorgasbord of options. Constant Contact is the well-known software for marketers and advertisers, helping them connect with clients. It has a rich history, beginning in 1995 as Roving Software, which was set up in a Massachusetts attic. At the time email wasn’t for business, but the founders knew it would be a marketing tool to help small businesses compete.
Ten years later, there were over 50,000 customers. In 2007, there were over 100,000 customers and the company went public. Event marketing was added to the product line as well as a second office in Colorado. Since then, more offices have popped up around the world as the company continued to grow. In 2014, a new powerful interface was unveiled that offered an all-in-one marketing solution. Still, the company was all about empowering small businesses and non-profits with solid customer service. That’s when Constant Contact caught the eye of Endurance.
Welcome to the Family
Endurance holds a number of brands like HostGator and BlueHost, two of the most well-known hosting companies in America. Endurance also focuses on small businesses and offers hosting, ecommerce, domain registration, emarketing, and tools for mobile business. In total, Endurance has over five million customers. With the acquisition of Constant Contact, Endurance has enjoyed an added jolt of business and has also secured one of the most famous of small business tools available.
Still, it’s not enough to stay above water if some major shifts don’t take place. More and more small businesses are looking for locally owned, boutique web hosts that also offer VPS hosting. Being in America isn’t enough, as many customers want to be able to theoretically swing by their host down the street if they feel like it. Plus, the necessary customer service automation required of such a big business is becoming a turn off.
Will this takeover put Endurance back on the right path to web service domination? We should know by the end of 2016.