$5 million proposition for 4 Rightside TLDs — XYZ’s win-win

Negari wins even if Rightside doesn’t take the deal.

Fresh TLD firm XYZ offered $5 million for four of Rightside’s (NASDAQ:NAME) fresh top level domain names today. Whether Rightside accepts the offer or not, its CEO Daniel Negari will walk away a winner.

Negari made the offer for .army, .dance, .dentist and .vet in a very public way on his blog.

He personally owns 2.7% of Rightside’s outstanding shares, and XYZ COO Mike Ambrose owns roughly the same amount. They would like people to see value in Rightside’s fresh TLD portfolio.

In his blog post, Negari noted that part of the reason for his offer was to “highlight the tremendous value Rightside’s registry component holds.”

So even if Rightside rejects his offer, he might benefit from a higher valuation of the firm.

(Shares in Rightside were down slightly today even though he disclosed the offer during trading hours. He filed his offer with the SEC following the markets closed.)

But don’t assume this is merely a stunt to push Rightside’s stock higher. I think Negari really wants to buy these domains. So if Rightside accepts the offer or doesn’t, Negari wins.

Another interesting aspect of this offer is that another sizable shareholder will push Rightside to accept the deal.

J. Carlo Cannell, who owns over 7% of Rightside through funds he manages, has demanded that Rightside stop putting so much emphasis on fresh TLDs. He even labeled two of the TLDs Negari has offered to buy, .Dance and .Army, “substandard”. I doubt that Negari’s selection of these two domain names was a coincidence.

If it were up to Cannell, I bet he’d jump at the chance to sell these domains for $5 million. The four domains in the offer have fewer than 15,000 registrations combined.

Rightside released a statement:

Rightside received an unsolicited offer to purchase certain of our fresh gTLD registries on Wednesday, March 30, 2016. We will consider this proposal in the ordinary course of business. We do not anticipate commenting further regarding this matter publicly.