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Reports: Demand Media Thwarts Bid By Thomas H. Lee Partners To Take It Private

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4/29/2012 10:29 PM ET

Online media company Demand Media, Inc. (DMD: Quote), which went public in January 2011, was reportedly over the weekend almost taken private by an for a price that was double its current market value of nearly $600 million.

A near $1.2 billion acquisition attempt by Thomas H. Lee Partners led investors was thwarted by Demand Media after the private equity firm asked for more time to complete financing. There were also doubts on Demand Media's ability to retain executives following the deal.

The private equity firm reportedly made an initial offer to take Demand Media private at $11.28 per share, a 55.6 percent premium to Demand Media's closing price of $7.25 on Friday. Meanwhile, the company's stock has been performing badly for the past 15 months since it listed itself in late January 2011 at $17 per share.

Santa Monica, California-based Demand Media was never put on the block, but as the offer price was at a significant premium they are said to have engaged in talks with Thomas H. Lee Partners.

The private equity firm was looking to split Demand Media's content arm from its lucrative domain-registar business. With over 10 million Internet domain names under management, the business is the world's largest wholesale registrar and the world's second largest registrar overall. Demand Media also owns Enom.com, which is the world's second largest domain registrar.

Demand Media's is comprised of two distinct and complementary service offerings: Content & Media and Registrar. It generates substantially all of its revenue through the sale of advertising in our Content & Media service offering and through domain name registrations in its Registrar service offering.

The company also has an extensive relationship with Google, Inc. (GOOG) and a significant portion of our revenue is derived from cost-per-click performance-based advertising provided by Google.

The company is scheduled to report financial results for the first quarter on May 8. On average, analysts polled by Thomson Reuters expect the company to report earnings of $0.05 per share for the first quarter, on revenues of $79.61 million. Analysts' estimates typically exclude special items.

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by RTT Staff Writer

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