CentralNic buys rest of Melbourne IT’s reseller business for AUD $24 million

CentralNic bulks up in Australia by acquiring carveout of what used to be Melbourne IT.

Domain name company CentralNic (London AIM: CNIC) is acquiring TPP Wholesale from ARQ Group Limited (ASX: ARQ), formerly known as Melbourne IT. The company will pay total consideration of AUD $24 million (USD $16.6 million). CentralNic will pay AUD $21.3 million up front and the transaction is expected to close by the end of next month pending financing.

ARQ Group Limited sold the other part of its domain name and hosting reseller business to Tucows in 2016 for AUD $8.1 million. That transaction included 1.6 million domains under management.

CentralNic’s acquisition includes the rest of the domain and hosting reseller business, which is primarily Australian accounts. It includes 840,000 domains under management and about 14,000 resellers. The domains include 19% of all .com.au domains.

This business delivered AUD $17.0 million in revenue to ARQ last year and, by CentralNic’s accounting, had AUD $3.9 million adjusted EBITDA for the year.

The purchase price is therefore about 6x adjusted EBITDA.

Tucows paid about 4.5x-4.7x EBITDA for its 2016 acquisition.

CentralNic already has a big presence in Australia. It acquired local registrar Instra for AUD $33 million in 2015.

CentralNic is now positioning itself as a roll-up play in the domain business.

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