Melbourne IT has sold off its digital marketing division, Digital Brand Services, to the US-based Corporation Services Company (CSC) for A$152.5 million.
DBS provides online brand protection and consultancy services to large global organisations seeking to maximise the value of their online assets including registering and selling domain names and providing services to protect a brand’s image online. The division was created in 2008 when Melbourne IT combined its Corporate Brand Services division with the Verisign DBMS business which the company had acquired for US$50 million.
The sale seems to represent very good value for Melbourne IT, and is the equivalent to 95 percent of Melbourne IT’s market capitalisation pre-DBS sale (as of 11 March 2013) of $160 million. Melbourne IT say the sale achieves the Board’s stated objective of its strategic review to unlock shareholder value by realising the intrinsic value of its businesses.
“The Board firmly believes this transaction is in the interests of shareholders,” said Melbourne IT Chairman, Simon Jones.
“The sale of DBS is a substantial result for shareholders. The transaction has crystallised a value for the business almost equivalent to Melbourne IT’s current market capitalisation, and represents a strong multiple of earnings relative to other recent transactions for this type of business. While this was not a business that we had specifically earmarked for sale, given the value creation provided by the transaction, this was an opportunity which could not be ignored,” Melbourne IT CEO and Managing Director, Theo Hnarakis, said.
“Management and the Board are now concentrating on updating the strategic plan for the business following the divestiture so we can provide clarity to shareholders before the AGM in May. We are confident that Melbourne IT’s remaining business divisions will benefit significantly from the arrival of new gTLDs, the completion of the Transformation program, and management’s clearer focus on executing our plans,” he said.
“We were attracted to the global scale and capabilities of DBS to combine with CSC’s leadership position in providing corporate domain and online services to create the best partner for companies worldwide to turn to for helping them manage, promote and protect their brands in the digital marketplace, said Corporation Service Company (CSC) Vice President, Jim Stoltzfus.