US-based cloud service 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 largest acquisitions by value of a Pakistani startup by an American firm.
The deal was announced by Cloudways co-founder and CEO Aaqib Gadit in a company blog post, noting that they are excited to “continue trajectory and mission with DigitalOcean.”
The announcement was echoed by DigitalOcean in their own news release.
“We have been working closely with DigitalOcean since 2014 and have developed a strong friendship and partnership with their team since that time,” said Gadit.
“SMBs love simplicity, performance, predictability, affordability and excellent support. Together with DigitalOcean, we can strengthen our mission to help SMBs grow through our cloud offerings.”
DigitalOcean CEO Yancey Spruill said 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 creating a simple, easy, intuitive and reliable platform offers 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 compound growth of more than 50% for three years.
Apart from expanding DigitalOcean’s technology and tools, the Cloudways acquisition will add more than 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, it is expected to be concluded in September. DigitalOcean expects Cloudways to contribute between $13 million and $15 million in revenue in fiscal 2022.
DigitalOcean said that while it is a cash deal, a significant portion of it will be paid over 30 months after the deal closes.
Cloudways was founded in 2014 and has been a partner of DigitalOcean ever since.
It serves more than 70,000 clients, 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 will enhance their options for digital agencies, e-commerce websites, bloggers, freelance developers and builders hosting on WordPress, PHP and Magento.
The service aims to make cloud computing easier for builders to spend more time innovating their businesses rather than wasting time managing infrastructure.
The company claimed that more than 124,000 customers paying $50 or more per month will now be jointly served by DigitalOcean and Cloudways, accounting for about 84% of the company’s total revenue.