June 16, 2006; 01:19 AM
TORONTO, CANADA - Tucows Inc. (AMEX:TCX, TSX:TC)
today announced that it has entered into an agreement to acquire
Mailbank.com Inc. (doing business as NetIdentity), a privately held,
profitable business owning and managing a domain name portfolio that
Tucows believes is one of the Internet's largest collections of surname
addresses.
Consideration for the transaction will be approximately US$18
million payable in cash, promissory notes and the issue of
approximately 3,603,000 shares of common stock to the stockholders of
NetIdentity. Tucows expects this acquisition to add between US$3 and $4
million in cash flow in 2007. Tucows now expects cash flow from
operations in the range of US$7-8 million for 2006 and US$10-12 million
for 2007.
A podcast and an FAQ concerning this announcement can be found here:
http://resellers.tucows.com/about/investor/netidentity
This acquisition will allow Tucows to offer personalized
Internet services through its channel of over 6,000 Internet access and
hosting providers. The portfolio includes thousands of the most common
surnames (such as smith.net) and will be used to enhance Tucows' email,
web publishing and domain services. For example, Tucows' channel
partners will be able to offer their customers personalized email
addresses such as [email protected] or blog and web addresses like
www.dirk.landstrom.com.
"Our philosophy is to acquire companies that can benefit from
our operational expertise and efficiencies and there is a very natural
fit between NetIdentity and Tucows' retail business," said Elliot Noss,
President and CEO, Tucows Inc. "However, this gives our wholesale
offerings, especially our hosted email service, something unique in the
marketplace. It took over ten years for NetIdentity to build this
incredible portfolio of surnames. With this acquisition, we will
provide our channel with the ability to personalize the services they
offer in ways they will not find anywhere else."
Based on Tucows' preliminary allocation of the purchase price,
Tucows expects the acquisition to have a negative impact on GAAP
earnings per share until 2008 but to be accretive to earnings before
depreciation and amortization in 2006 and 2007. More detailed financial
comments can be found in the podcast.
The acquisition is expected to close on, or about June 16,
2006 subject to customary closing conditions, including the approval of
the American Stock Exchange and the Toronto Stock Exchange. Following
closing, Tucows will immediately transition all of NetIdentity's
operations from Boulder, Colorado to its headquarters in Toronto,
Canada.
About Tucows
Tucows Inc. (AMEX:TCX, TSX:TC) provides Internet services and download
libraries through a global distribution network of 6,000 service
providers. This distribution network primarily consists of web hosting
companies, ISPs (Internet Service Providers) and other Internet related
service companies. These companies use Tucows' provisioned services to
offer solutions to their customers: enterprises, small and medium
businesses and consumers. Tucows is an accredited registrar with ICANN
(the Internet Corporation for Assigned Names and Numbers) and earns
most of its revenue from domain name registration services plus hosted
email, spam and virus protection, blogware, website building tools, the
Platypus Billing System and digital certificates. For more information
visit www.tucowsinc.com.
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