Is HostGator being Acquired by EIG?

There are rumors floating around that Endurance International Group is purchasing HostGator for 225 million dollars. This is the same company that owns BlueHost, JustHost, FatCow, Ipage, and several other hosts. The acquisition could mean changes for current HostGator customers. There are many accusations of hosts declining in quality after being acquired by EIG. On the other hand, one of EIG’s more recent acquisitions, BlueHost, has been fairly successful. There are a lot of potential improvements that could take place using methods that EIG has developed for support and billing.

As of June 28, I can confirm that HostGator is actually in the process of being purchased. There is an email floating around that Brent Oxley, CEO of HostGator, sent to his staff to explain the situation. The email is reprinted below:

“There have been rumors flying around the web and the office about HostGator being sold for many years now. I’d like to address these rumors and put many of your fears to rest. I still own 100% of HostGator and haven’t collected a single penny towards any buyouts at this time.

The latest rumor is the first that actually has some truth behind it. I have indeed agreed to sell HostGator to Endurance International Group, which is why you’re hearing stories about EIG raising financing to purchase us. We are currently under contract and if everything goes according to plan, EIG will be purchasing HostGator in the next 3-4 weeks. This is the first time in HostGator’s history that we have ever reached an agreement on the terms needed to complete a deal.

In the last few months, I’ve spent countless hours getting to know EIG’s CEO Hari Ravichandran, and I can honestly say that he is one of the most trustworthy and knowledgeable people that I’ve ever met. In other deals we’ve looked at, the potential buyers have only seen HostGator as a slot machine and that’s not true of Hari. He clearly understands that HostGator is the 800 pound gorilla that it is today thanks to all of you who provide the legendary support that HostGator is known for.

It’s only natural for all of you to be apprehensive towards change and the fear of possibly losing your job. I can write whatever I want in order to cover for EIG, but I would rather let the facts speak for themselves:

When I first heard about EIG purchasing Bluehost in November 2010, I was extremely ecstatic. The first thoughts that came to mind were that EIG was going to destroy the company, resulting in one of our biggest competitors going the way of the dodo. However, rather than plunder and pillage, they’ve hired and flourished. Bluehost was at 280 employees when the sale closed and they have 450 today. Their management team has stayed the same and the culture has stayed the same. Now, the Bluehost culture, employees, and philosophy have taken hold to become the new status quo of EIG.

I’m confident the same will happen once again with the best of HostGator culture, ideas, people, and leadership coming together at EIG to create a more powerful hosting company than the world has ever seen. In fact, I’ve heard that EIG with HostGator will be even bigger than GoDaddy.

Once this deal is complete, I will continue to own all of the HostGator occupied buildings through Oxley Leasing. EIG and I will soon have a leasing deal in place that will not only include all of the current occupied space leased, but will also expand Austin by 30,000 square feet as well as Houston by another 10,000-20,000 square feet. Hari has also told me that one of his first acts of business will be to do a major renovation of the Houston office. If EIG planned on downsizing, they wouldn’t be signing such huge expansions in both Houston and Austin.

HostGator will be EIG’s largest acquisition to date and with that it’s going to create countless opportunities for each and every person. Not only at HostGator, but also at other EIG brands. I can’t stress enough how instrumental it will be for EIG to replicate HostGator’s strengths across all of their brands, and to do that, they will need HostGator leaders and know how.

There are many of you who are going to call me crazy for deciding to sell during a time in which HostGator has experienced unprecedented growth and success. I’ll do my best below to share a few of the many reasons behind my decision:

* I want to travel the world before my wife and I have kids. * I’ve been doing HostGator since I was 18, and I’m looking for a new challenge. * I’m extremely worried about the financial path our country is headed down. * Taxes will be going up significantly in 2013, making it more difficult for business owners. * I’ve failed more times than I can count to launch software that would allow us to compete as a registrar. * We have tried and failed to develop a billing system that has automated and can integrate with our key systems such as chat, phone, affiliates, and tickets. I think we are finally on the right track, but unfortunately I no longer have the patience to wait for it to all come together. Thankfully EIG has tackled a lot of these challenges already. * I have practically 100% of my chips in HostGator and if something should ever happen to the company, I’d more than likely be bankrupt in a matter of a few months.

I could stick with HostGator for a few more years and turn it into a multi-billion dollar business, but I think now is the right time for me to move on and to let the company continue to grow and succeed under EIG.

If any of you have any questions, feel free to email me at brent@hostgator.com and I’ll do my best to get them answered. The key thing to remember is that this deal isn’t complete yet, and if and when it completes, Adam Farrar and the rest of management won’t be going anywhere. Sincerely,

Brent Oxley

I contacted Brent Oxley myself and he confirmed the validity of the first email.

From: Chris

To: Brent

“Hi I was wondering if I could get you to confirm the EIG is acquiring HostGator. If so, I was also wondering if you know of any major changes likely to take place.

Thanks,

Chris”

3:39 PM June 28

He responded with the following:

“Hi Chris,

I did in fact send the email out that has been going around the internet. There are no major changes planned since the same staffing and management would be staying in place.

Sincerely,

Brent Oxley”

9:26 PM June 28

There is a thread here on the forum WebHostingTalk.com discussing the acquisition.

Two additional people on WebHostingTalk have posted emails allegedly from Brent that confirm the first email.

If the acquisition takes place I am not sure what the future of HostGatorHub.com will be. While advantages due to economies of scale and implementation of methods developed by EIG could help HostGator, only time will tell. If HostGator ceases to be a high quality host I will not continue to run a site promoting it. At the moment I’m cautiously optimistic about the acquisition. Many people involved in the hosting industry hate what EIG has done in previous acquisitions. While I sympathize with that view, I do not think that it is reasonable for people to have the same expectations about HostGator. HostGator has a type of brand integrity that EIG will have a major incentive to maintain and the 225+  million purchase price suggests that EIG is in it for the long hall.

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