Domain name registrar Melbourne IT will acquire VeriSign's underperforming Digital Brand Management Services for US$50 million.
The deal will see Verisign's Digital Brand Management Services (DBMS) become part of Melbourne IT's existing Corporate Brand Services division, which offers "brand management services" such as protection against cybersquatting.
Melbourne IT has funded the acquisition through a five-year US$55 million loan with National Australia Bank, which will see it facing a total debt of US$40 million once the transaction is complete.
DBMS was suffering under VeriSign's management, according to Melbourne IT CEO and managing director, Theo Hnarakis.
"Under Verisign, DBMS hasn't had the investment, focus or attention it has deserved... It's been flat over the last couple of years, but we don't expect that going forward," he said.
Hnarakis added Melbourne IT was an attractive target due to its customer base.
Last financial year, the Versign business turned over US$29 million and had an annual profit of US$4 million.
The company expects the integration to cost around US$2.8 million and plans to invest US$1.5 million in a new datacentre to support the new business. It also expects to save US$1.5 million per year from the business, according to Hnarakis.
The savings are expected to result from measures including migrating customers from its existing brand management portal to VeriSign's portal and cutting one of the newly-merged company's accounting system. The company is not yet sure if there will be job cuts, but a spokesperson said it plans to review staffing particularly in areas where both Melbourne IT and DBMS have offices, such as in the US and Sweden.
The acquisition will add 120 staff to Melbourne IT's ranks, and will add offices in countries including Germany, France and South Africa, where the registrar has not previously had a presence. Melbourne IT's Corporate Brand Services division currently has 80 staff across nine offices.
The acquisition will quadruple Melbourne IT's enterprise customer base and double the 150,000 brands it currently manages under its Corporate Brand Services division.