Minds + Machines Group (MMX), registry for 27 new gTLDs with around 1.4 million registrations, has announced it is acquiring ICM Registry, the registry for gTLDs such as .xxx and .porn, which has around 100,000 registrations.
The acquisition will see MMX acquire the entire membership interests of ICM Registry LLC, a US company, for a cash payment of $10.0 million, funded from the Company’s existing cash reserves, and a total of 225,000,000 new Ordinary Shares with an equivalent value of approximately $31.0 million. The Acquisition is conditional on receiving approval from ICANN.
ICM, a Florida based company, is the owner of 4 top level domains – .xxx, porn, .adult and .sex. In its tax filings for the 12 months ended 31 December 2017, ICM reported net sales of $7.27 million and net income of $3.5 million, from approximately 100,000 registrations. In 2017, approximately 78% of revenue was renewal based and approximately 14% was generated from premium sales.
The acquisition will see MMX dealing with 2 backend registry providers – Nominet for MMX’s current new generic top level domains and Afilias for ICM’s.
“We are delighted to have entered this agreement. We expect the Acquisition to be earnings enhancing in the current year and believe it will deliver scale, strong recurring revenues and positive working capital to the Company in 2018 and future years,” said Toby Hall, CEO of MMX. “Further, it will strengthen the quality of our revenues, both accelerating MMX’s already fast-growing renewal base and improving the geographic make-up of our sales, given ICM’s revenues are primarily derived from the US and Europe. We see this transaction as a major step forward in our ambition to introduce a progressive dividend policy over the next 18 months.”
According to a news release from ICM Registry, their current CEO is leaving working in the domain name business and will work on his blockhain based Age Verification business AVSecure.com, according to Domain Investing.
“Having successfully built and sold several technology businesses throughout my career in other consolidating markets, it became clear over the last few years that ICM’s business, shareholders and employees would be best served as part of a larger group with the corresponding resources, vision, opportunities and obvious cost savings that would bring,” said Lawley in a statement.
“I strongly believe ICM’s shareholders, customers and employees will be well served by this acquisition; MMX has a very dynamic management team. We received 4 offers in total for the business, some all cash and others a mixture of cash and stock. After lengthy, detailed negotiations and due diligence with the interested parties, the arrangement with MMX was clearly the best fit.”
Lawley will be a significant shareholder in MMX, will see Lawley will become the largest shareholder in MMX with a holding just over 15% and as part of the transaction, the 5 remaining senior managers of ICM will all have meaningful stock holdings in MMX.
Separately, MMX has entered into a Facility Agreement with a vehicle associated with its substantial shareholder, managed by London and Capital Asset Management Ltd, which is beneficially interested in approximately 16.03 per cent of the current issued share capital of the Group. The $3.0 million working capital facility, for draw-down at the Company’s calling post completion of the Acquisition, is available to support future innovation and acquisition orientated activity.
Also on Friday, the day of the acquisition announcement, MMX released their financial results for 2017. For domain names, the highlights they released were:
- Industry leading renewal rates achieved for .vip in China
- Successful renewal seasons completed in US and Europe across portfolio
- Domains under management grown 61% in year to 1.32million (2016: 821,000)
- MIIT approval gained for .law, .购物(shopping), .work, and .beer for future potential release in China
- .boston launched in US
- Process of re-balancing regional revenue mix begun: US revenues increased 14% to 32% of total 2017 revenue (2016: 28%), Europe’s grown 7% to 15% (2016: 14%), and China’s decreased 9% to 53% (2016: 58%), management expects this trend to continue in 2018.
In 2018, MMX has appointed strategic partners in China to spearhead the development of .law and . 购物.