October 16, 2003 11:15 AM PDT
VeriSign sells off domain registrar
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The Network Solutions business is set to go to Pivotal Private Equity, a Phoenix-based venture capital firm, in exchange for $60 million in cash and a $40 million senior subordinated note. VeriSign will also retain a 15 percent equity stake in Network Solutions.
VeriSign said it would not part with the .com and .net database it operates, which it acquired through its $21 billion buyout of an independent company called Network Solutions three years ago. That company consisted of two businesses--a registrar, which sells Internet addresses, and a registry, which directs people to Web sites.
It's giving up the registrar business, which has become essentially a commodity service in a field in which competition has been heating up. VeriSign rebranded the unit in January as Network Solutions after two years of operation under its own name and had been seeking a buyer for the business over the last several months.
What it's keeping is the registry, recently renamed as VeriSign Naming and Directory Services--and which operates in a field where the company still has a relative monopoly. The registry business, according to VeriSign, is the backbone of a global .com and .net domain name infrastructure that handles over 10 billion interactions per day.
The deal was made in order to tighten VeriSign's focus on delivering infrastructure services across Internet, telecommunications and Web security markets, a spokesman said.
VeriSign in recent weeks has been in the middle of a growing controversy over its Site Finder service, which redirects all misspelled or unassigned .com domain names to a search page it manages. On Wednesday, the company told a group of technical experts in Washington, D.C., that it plans to revive the service after having found "no identified security or stability problems" in the system.
When it was active, Site Finder added a "wild card" for .com and .net domains that snared queries to nonexistent Internet sites and forwarded them to VeriSign's own servers.
The Network Solutions transaction is expected to close in the fourth quarter.