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Minds + Machines plans sale of assets to GoDaddy subsidiary

Published: 07:30 08 Apr 2021 BST

Minds + Machines Group Limited - Minds + Machines plans sale of assets to GoDaddy subsidiary

Minds + Machines Group Limited (LON:MMX) said it agreed to sell the majority of its assets and transfer its rights and obligations under contracts and partnerships to Registry Services LLC, a subsidiary of US web domain group GoDaddy, for US$120mln in cash.

The top-level domain (TLD) registry firm said the deal represented an estimated value of 8.8p per share, a 91% premium to its closing price on Wednesday, adding there was a “strong strategic rationale” to sell to an established player in the industry.

READ: Minds + Machines appoints new CEO, reports in line 2020 trading

Explaining the reasons for the sale, the company said following a review its business had “strong recurring cash flows” but expects limited opportunity for material organic growth beyond its AdultBlock services without fundamental changes.

Consequently, MMX said it needs to consider “a multi-year transformation of the company, further inorganic growth and/or pursuing additional revenue opportunities outside the core business in order to effectively leverage its relatively high fixed costs or seek a merger or sale of the business”.

The firm said it received irrevocable undertakings in favour of the asset sale from investors holding 64% of its shares and the board recommends the deal to investors.

MMX said it will use the proceeds of the sale to maximise shareholder value, which it said will likely include returning a portion of the cash to shareholders while considering alternative acquisitions. Some of the funds will also be used to provide transition services ahead of the completion of the asset transfer, which is expected to be no later than January 31, 2022.

"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”, MMX chief executive Tony Farrow said in a statement.

"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 US$120 million in cash", he added.

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