VeriSign sells Network Solutions

IDG News Service ^ | October 16, 2003 | Scarlet Pruitt

[HAL9000]

VeriSign Inc. is selling its Network Solutions business, which provides Internet domain name registrations, to Pivotal Private Equity for approximately $100 million so it can focus on infrastructure services.

VeriSign gained Network Solutions' registrar and registry businesses when it purchased the company in 2000. The registrar business, which offers services such as business e-mail, Web sites, hosting and Web presence, will go to Pivotal Private Equity, the company said Thursday.

VeriSign will retain the registry business, which provides the backbone for the .com and .net domain names. VeriSign recently renamed the registry business VeriSign Naming and Directory Services and intends to keep that part of the business as part of its Internet Services Group, the company said. The Internet Services Group also provides authentication and e-commerce services for companies and Web sites.

The Mountain View, California company said that it will receive $60 million in cash and $40 million in senior subordinated notes for Network Solutions, while still retaining a 15 percent equity stake. The deal is expected to close in the fourth-quarter of this year and is subject to certain closing conditions.

Pivotal Private Equity said in a statement that it intends to broaden Network Solutions' product portfolio and build new distribution channels. Pivotal Private Equity is a unit of investment and development firm Pivotal Group Inc., based in Phoenix.

Representatives for the companies were not immediately available to comment further on their plans.

[John Locke]

What this press release conveniently omits is that Verisgn bought Network Solutions for $20 billion. Yes, billion.

Of course, that wasn't cash; it was Verisign stock. At the time, the stock was traded at almost $250. Today, it is just above $15.

So, if you do the math, Network Solutions investors lost 94% of their money, or 18.8 billion, and Verisign lost about 1.1 billion. The "new economy" in action.