Shares of GoDaddy Inc. (NYSE: GDDY) climbed as much as 11% on Thursday after the Financial Times reported that cybersecurity company Gen Digital had made a preliminary approach — an initial, non-binding indication of interest — to buy the web hosting and domain registration company. The move was strong enough to trigger a brief trading halt for volatility, a mechanism exchanges use to pause trading when prices swing too sharply in a short window.

Gen Digital stock (Nasdaq: GEN) moved in the opposite direction, falling about 8% on the day.

According to the FT, Gen Digital made its first offer in recent weeks. The talks are described as being at an early stage, and there is no guarantee that they will lead anywhere. No price or structure for a potential offer has been made public.

Neither company has confirmed the report. A GoDaddy representative told Barron's that the company does not comment on mergers and acquisitions, and Gen Digital declined to comment.

Why GoDaddy Could Be a Fit

Founded in 1997 and publicly listed since 2015, GoDaddy operates roughly 81 million web domains — close to a fifth of all registered domains worldwide — making it one of the largest domain registrars. The company also serves more than 20 million small businesses, creators, and entrepreneurs.

Gen Digital is the company behind Norton 360, LifeLock, CCleaner, and ReputationDefender. It was formed in 2022, when NortonLifeLock and Avast combined. For a security company with that portfolio, GoDaddy's customer base opens the door to bundling antivirus and identity protection tools with web hosting and domain services.

Gen Digital currently carries a market value of around $15.7 billion, while GoDaddy is valued at roughly $12.2 billion. Put another way, the target's market value is equal to roughly three-quarters of the acquirer's own, which means a transaction of this scale would rank among the bigger moves in Gen Digital's history. The FT report did not include specific financial terms.

A Rough Year for GoDaddy

The takeover interest lands during a difficult stretch for GoDaddy stock, which was down about 15% for the year before Thursday's jump. Part of that pressure has come from worries that AI website-building tools could eat into GoDaddy's own AI product, called Airo, which lets customers build websites and branding materials with the help of a virtual assistant. Investors have questioned whether newer AI tools from competitors could pull business away from the product.

Not everyone shares that concern. Oppenheimer analyst Ken Wong said last month that he was confident in Airo, pointing to higher customer spending and effective cross-selling tied to the product. He rates the stock Perform. Wong also noted that GoDaddy's management has kept costs tight while returning cash to shareholders through buybacks.

Rival domain and web-building company Wix.com also moved higher on the news, gaining more than 2%. Investors appeared to be pricing in the idea that consolidation in the space could extend beyond GoDaddy.

For now, the market is left waiting. Nothing about the approach has been finalized, and both companies are staying quiet in public. The next signal will likely come if talks progress far enough for either side to publicly confirm or deny that a deal is in the works — or if a price and structure for a potential offer eventually surface.

Source: CoinCentral