To go private in $2.9 billion deal — Neustar (NSR)

Deal comes ahead of revenue plunge due to losing lucrative contract.

Domain name and marketing analytics firm Neustar (NYSE: NSR) has entered into a deal to be purchased by private equity firm Golden Gate Capital in a transaction valued at approximately $2.9 billion, counting debt.

The deal comes at a pivotal time for the firm, which is regarding to lose its $500-million-a-year Number Portability Administration Center (NPAC) contract with the U.S. government. It has been on an buyout binge to grow revenue in anticipation of losing the contract. Among the domain name firms it has purchased are .co and Bombora Technologies (which owns ARI Services).

In June, the firm disclosed it was going to split into two separate firms: one to hold the remainder of the NPAC contract and the other to hold the rest of its businesses.

Going private is perhaps a better way to deal with the contract fallout than splitting into two publicly traded firms. It also opens up the possibility of divesting some of its assets more easily in the future.

Shares closed yesterday at $27.65; the offer is for $33.50 per share. Shares of Neustar are up 20% to $33.40 in pre-market trading.