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Is Endurance International Group (EIG) Set to Acquire HostGator?

Reports and rumors are circulating that Endurance International Group (EIG) will acquire HostGator after an internal email or letter from CEO Brent Oxley to HostGator employees was posted on PasteBin. Specifically, the supposed internal document says that the acquisition is set to occur within the “the next 3-4 weeks” plus a portion of the letter focuses on EIG’s previous acquisition of competitor Bluehost back in 2010.

Oxley, who started HostGator in 2002 when he was only 18, gave plenty of good reasons in the letter to sell the company. These reasons included wanting to travel with his wife before they settle down to have children along with a few business ones such as expected tax increases in 2013 along with worries about the “financial path [the US] is headed down.”

In addition, Oxley pointed out in his letter that when he had first heard that Endurance International Group (EIG) would be purchasing Bluehost in November 2010, he was ecstatic because he thought that EIG would destroy one of his biggest competitors.  However, he noted that “rather than plunder and pillage, they’ve hired and flourished” as Bluehost had 280 employees when it was acquired and now they have 450.

There are also reports that the Endurance International Group (EIG) is raising $225 million for the buyout. However and under a proposed deal, HostGator’s management team will remain in place while Oxley would continue to own all of the company’s occupied buildings through Oxley Leasing. There would also be a leasing deal between Endurance International Group (EIG) and Oxley to expand its Austin office by 30,000 square feet plus its Houston location by another 20,000 square feet.

Its worth noting that HostGator has more than 12,000 servers under management, 400,000 customers and over 700 employees. In fact, a HostGator and Endurance International Group (EIG) combination may end up being bigger than GoDaddy – currently the world’s largest web hosting company that was sold to a private equity firm partnership for about $2.25 billion last year.

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