VeriSign Inc., which this week agreed to spend a stunning $21 billion in stock to acquire Internet domain registration company Network Solutions Inc., hopes the acquisition will make it the first choice among e-commerce startups looking for someone to guide them online.
“We believe it creates a global internet infrastructure leader [that] can provide the critical life cycle services for every e-business,” said VeriSign CEO Stratton Sclavos. The combined entity will work with Net newbies “from the time they get on and get a domain name, through their establishing of a commercial presence, all the way through simple e-commerce and on to global trading.”
The merger of VeriSign, Mountain View, CA, and Network Solutions, Herndon, VA, is relevant to the Web marketing world because the companies want to become central to the process of new Net companies springing up and maintaining their identities. VeriSign is the biggest e-commerce and e-mail security firm in the United States, selling authentication and validation services. Just last month it closed a deal to buy Signio Inc., Redwood Shores, CA, an online payment processing company.
Meanwhile, Network Solutions runs the world’s leading registration service for domain names. The company makes money by reserving dot-com, dot-net and dot-org names for entrepreneurs who want to nail down a site name to go along with their business aspirations.
If the acquisition closes in the third quarter as planned, VeriSign will have access to more than 8 million registered users of the Network Solutions’ services. And presumably, the company would try to turn those subscribers, many of whom want to start e-businesses, into a revenue bonanza as it sells its security and payment services to those them.
“We describe our corporate mission as providing the trust services that make e-commerce work. We plan to do this for every transaction, every communication, everywhere around the world,” Sclavos said.
However, some analysts pointed out that the merger doesn’t improve VeriSign’s ability to link e-commerce firms with the suppliers, customers or other Web players that are critical to businesses. Reports indicate that security software maker competitor Entrust Technologies Inc., Plano, TX, and UK-based rival Baltimore Technologies Inc. have an edge in that area.
“It’s more of an end-to-end solution that we provide, not just one [security] segment,” said Entrust spokeswoman Carrie Bendzsa.
But that didn’t stop VeriSign from forking out a $21 billion ante for Network Solutions. Stock analysts at SG Cowen and ING Barings upgraded their ratings on VeriSign after the deal was announced, but the company’s shares plunged nonetheless after word of the acquisition broke, from the near-260 range to the low 180s. At press time, the stock had rebounded to almost 250.
