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Price for Melbourne IT's DBS division almost market cap of entire company

Tue, 12th March 2013, 16:38

Melbourne IT has sold off its digital marketing division to US company Corporation Services Company for $152.5 million. Not a shoddy number considering Melbourne IT entire market capitalization prior to the sale was “just” $160 million.

The sale of the division which registers and sells internet domain names as well as services to protect brand image online was announced to the market after close of trading on Tuesday. Melbourne IT had requested a trading halt earlier in the day. The sale was considered a surprise by analysts, along with the value as it was expected that Melbourne IT would sell off other, less profitable units as part of their ongoing strategic review.

Melbourne IT CEO Theo Hnarakis says that: 

While the DBS division had not been specifically earmarked for sale, the opportunity to sell to CSC couldn't be ignored. What this does is return Melbourne IT to a hosting business for enterprise and small and medium sized businesses. We’re confident now that we don’t have the distraction of international operations, we can put all our energy into growing the SMB and enterprise hosting market. 

Melbourne IT’s DBS division was born in 2008 following the merger of the company’s Corporate Brand Services division with VeriSign's former DBMS business, which Melbourne IT bought for $50 million. The digital marketing division recorded flat revenues of $55.2 million in 2012.