Web hosting company The Go Daddy Group Inc agreed to be bought by a private equity consortium led by KKR and Silver Lake for $2.25 billion, including debt, people close to the situation said on Friday.
The decision to sell will give Go Daddy access to deep-pocketed backers to buy other firms and broaden its presence internationally, Go Daddy's founder Bob Parsons told Reuters in an interview.
Parsons said using the private equity buyers knowledge of the public markets would eventually aid in the company's IPO should it take that path.
The private equity buyers also include Technology Crossover Ventures. Go Daddy announced the deal but did not disclose the terms.
The buyers were willing to finance the buyout with a larger equity portion than debt, Herald Chen, head of KKR's software and Internet effort told Reuters.
There is more equity than debt going into the deal because this is a growing company and a growth investment for the investment group, Chen said.
Parsons and the company's board of directors decided to hire Frank Quattrone's Qatalyst Partners during the summer of last year after receiving numerous calls of interest from parties looking to buy the company.
We have talked to a number of firms and eventually we met the combination of KKR and Silver Lake and just absolutely was amazed what they brought to the table, Parsons said.
Since founding the company in 1997, Parsons has seen Go Daddy grow into the world's largest Web hosting provider, serving more than 9.3 million global customers and managing more than 48 million domain names.
Go Daddy has over 3,000 employees, with roughly 500 dedicated to product development.
Building on Go Daddy's exceptional customer service and loyal customer base, we believe there is significant opportunity to expand the current portfolio of products and services as well as accelerate growth internationally, Chen said in a company press release on Friday.
Go Daddy filed to go public in 2006, but at the time was told that it would be required to take a 50 percent haircut -- a percentage that is subtracted from the par value of assets that are being used as collateral -- on its initial public offering.
The company instead decided to pull its filing citing unfavorable market conditions, Parsons said.
We grew by 22 percent during the recession and our growth hasn't slowed, he said.
Parsons, who is currently chief executive officer, will become executive chairman of Go Daddy, while current President and Chief Operating Officer Warren Adelman will move into the role of CEO, Parsons said.
The deal is expected to close before the end of the year and requires regulatory approvals in several jurisdictions including Europe and the United States, Tony Ling a director of Silver Lake told Reuters.
Barclays Capital, Deutsche Bank Securities Inc and RBC Capital Markets acted as financial advisors and, along with KKR Capital Markets, they or their affiliates provided financing commitments for the transaction.
(Editing by Carol Bishopric and Yoko Nishikawa)