Web.com to buy Network Solutions for $560 million

Original Internet domain registrar brings 2 million small business customers to new owner

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Pioneering domain-name registrar Network Solutions is being acquired by Web.com Group, an Internet marketing and website services provider, for $560 million.

Web.com said it will integrate Network Solutions' website services, online marketing and domain registration businesses with its own Internet and marketing services targeting small and medium-sized businesses.

Network Solutions currently is majority-owned by private-equity firm General Atlantic LLC, which bought the domain registrar in 2007 from Najafi Companies, another private investment firm, for a reported $800 million.

Network Solutions says it has more than 7 million domains under registration, along with 1.5 milllion email boxes and more than 350,000 websites.

Once the acquisition is final, the combined company expects to have more than 9 million domains and approximately 3 million paying subscribers.

Web.com is particularly interested in Network Solutions' 2 million small-business domains. In a statement announcing the deal, Web.com CEO David Brown said, "Small and mid-sized businesses are increasingly looking to leverage the growing adoption of online local search, social media and mobile devices to grow, and they need cost-and time-efficient help. Our combined organization will have far greater resources to market our end-to-end suite of solutions, in addition to using the power of a national brand for the first time in our history."

Founded in 1979 as a technology consulting form, Network Solutions in 1993 became the first Internet domain registrar under an exclusive deal with the U.S. National Science Foundation (NSF) that made the company the sole registrar for .com, .net and .org domains.

Network Solutions initially registered domains for free under its $5.9 million NSF contract. But in 1995, after NSF gave the company permission to charge for domain registrations, the company began gouging customers, registering domains for two years at $100 a pop.

This eventually led to the end of Network Solution's monopoly on domain registrations, and competitors soon entered the market just as the Internet began expanding exponentially.

Since then Network Solutions has been surpassed by GoDaddy, which manages 36.5 million domains and has a 31 percent market share. Network Solutions is ranked No. 4 among domain registrars, with 5.4 percent of the market.

GoDaddy announced in late June that it was being purchased by two private-equity firms and a third investor for $2 billion to $2.5 billion.

Read more of Chris Nerney's Tech Business Today blog and follow the latest IT news at ITworld.

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