Donuts makes $70 million unsolicited offer for Rightside’s fresh TLD business

Public offer comes following Rightside declined earlier offers.

Donuts disclosed today that it’s making a $70 million offer to acquire Rightside’s (NASDAQ:NAME) fresh top level domain name business.

The firm is making the offer public following “Rightside has repeatedly disregarded” Donuts’ previous overtures, Donuts stated in a press release.

The goal of making the offer public, I imagine, is to put shareholder pressure on Rightside.

Rightside investor J. Carlo Cannell has asked the firm to divest some of its underperforming TLDs and focus on its registrar business. His call for other shareholders to join him hasn’t caught on, with most shareholders voting for the firm at its last shareholder meeting.

Earlier this year, XYZ made an unsolicited offer to acquire four Rightside top level domain names for $5 million.

On the face of it, $70 million might represent a nice return for Rightside. Ahead of acquiring .games, it had spent a net $16 million to acquire its 39 top level domains. But the firm has invested substantially in marketing and behind-the-scenes operations, counting setting up its back-end registry. Donuts uses Rightside’s registry platform, and I imagine it would be part of the buyout.

Rightside has a market cap of $176 million.

If it were to sell the fresh top level domain assets, it would retain its registrar platforms (eNom and Name.com), its portfolio of regarding 300,000 domain names as well as half of NameJet.

Rightside and Donuts have been close partners in addition to the back-end registry relationship. They had an arrangement for a basket of top level domains that they divvied up as stated by a complicated schedule.