Warburg, Goldman buy IT firm from Accel-KKR
Warburg Pincus LLC and Goldman Sachs said on Monday they would buy a majority stake in a hosting and online services firm from private equity outfit Accel-KKR, seeking to tap growth in the cloud services market.
Terms of the deal were not disclosed but a person familiar with the matter said the firm, Endurance International Group, would change hands for about $1 billion, or 7.5 times forward earnings before interest, tax, depreciation and amortization.
Accel-KKR bought its majority stake in Endurance in October 2008, leaving the company's senior management team with a stake in the company. Under the new deal, Endurance's management and Accel-KKR will continue to hold an interest.
Warburg Pincus's stake in Endurance will be more than 50 percent, the person familiar with the matter said. Credit Suisse arranged $350 million in first-lien debt for the deal, the person added.
Founded in 1997, Endurance offers web hosting accounts to over 1.9 million customers, managing more than 7.7 million domains and delivering over 5 million applications through its proprietary cloud-based platform.
Looking for cheaper alternatives to run their businesses, many small- and medium-sized firms are migrating to hosting their applications on the cloud. These applications run on servers and hardware provided by companies like Endurance.
The popularity of such services makes Endurance a growth rather than a cost play for Warburg Pincus and GS Capital Partners, Goldman Sachs's private equity arm, said the person familiar with the matter.
Credit Suisse Group> and Cleary Gottlieb Steen & Hamilton LLP advised Warburg Pincus on the deal, while Morgan Stanley and Kirkland & Ellis LLP advised Endurance and Accel-KKR. (Reporting by Greg Roumeliotis in New York, editing by Bernard Orr)