US-based cloud services provider DigitalOcean Holdings Inc. has agreed to acquire Cloudways, a Pakistani web-hosting firm, for $350 million in an all-cash deal.
This is perhaps one of the biggest acquisitions by value of a Pakistani startup by an American firm.
The deal was announced by Cloudways Cofounder and CEO Aaqib Gadit in a company blog post, noting that they are excited to “continue trajectory and mission with DigitalOcean.”
The announcement was mirrored by DigitalOcean in their own news release.
“We have worked closely with DigitalOcean since 2014 and have developed a strong friendship and partnership with their team since that time,” Gadit said.
“SMBs love simplicity, performance, predictability, affordability, and great support. Together with DigitalOcean, we can turbocharge our mission of helping SMBs grow through our cloud offerings.”
DigitalOcean CEO Yancey Spruill said that SMBs represent more than 50% of global gross domestic product (GDP) and spend $70 billion on cloud infrastructure today.
“With this acquisition, we are making it easier to launch, build and scale a business on DigitalOcean,” he said, adding that together, they will be focused on providing a simple, easy, intuitive and trusted platform to better serve SMBs so they can build their businesses and pursue their dreams of entrepreneurship.“
DigitalOcean expects Cloudways to generate more than $52 million in revenue in fiscal 2022, showing three-year compound growth of over 50%.
Apart from expanding DigitalOcean’s technology and tooling, the acquisition would add Cloudways over 280 employees to DigitalOcean’s global employee base, increasing it by 30% — adding expertise in key growth areas that will continue to drive productivity and performance across the platform.
When will the deal be finalized
According to Gadit, while a deal has been broadly agreed upon, it is expected to be closed in September. DigitalOcean expects Cloudways to contribute between $13 and $15 million of revenue in fiscal 2022.
DigitalOcean said that while it is an all-cash deal, a significant portion of it will be paid over 30 months after the deal closes.
It serves more than 70,000 customers, including digital agencies, SMBs and individuals, helping them build an online presence and e-commerce businesses.
DigitalOcean provides developers, startups, and small and medium-sized businesses (SMBs) with cloud infrastructure and fully managed offerings.
With the acquisition of Cloudways, DigitalOcean would enhance their options for digital agencies, eCommerce sites, bloggers, freelance developers and builders hosting on WordPress, PHP and Magento.
The service intendeds to make cloud computing easier for builders to spend more time innovating their businesses rather than wasting time managing infrastructure.
The company claimed that over 124,000 customers who pay $50 or more per month will now be served by DigitalOcean and Cloudways collectively, accounting for about 84% of the company’s total income.