Rightside, one of the top registries on the gTLD market, has rejected a proposed deal with another key market player, the Donuts company, Domain Incite reported. Earlier, Donuts offered to buy Rightside’s portfolio of gTLD registry contracts for $70 million. Rightside CEO Taryn Naidu accused Donuts of undervaluing the price of the assets in what looked like an “opportunistic” attempt to capitalize on Rightside’s temporary difficulties in a manner that, he believes, “would not be in the best interest of Rightside shareholders.”
Earlier, Rightside faced pressure from some of its investors, who were unhappy about the poor success of the company’s new gTLDs and claimed the company should get rid of underperforming assets and focus on the more profitable domain registration business. The idea was backed by investors Carlo Cannell and Frank Schilling, both of whom own small, yet solid chunks of Rightside assets. So, Donuts’ attempt to take advantage of the uncertainty in its rival’s ranks is, after all, understandable.
Given 40 new gTLDs in Rightside’s portfolio today, the $70-million offer means $1.75 million per gTLD, which is significantly lower than the average auction price. On the other hand, the domain registration business falls short so far, and $2.6 million in the first quarter of 2016 was not what the company had expected. Even so, Rightside remains optimistic and hopes that its registry business will bring in $50-75 million in annual profits over the next 3-5 years.
