Online hosting firm announced that it has signed a definitive agreement to acquire privately held domain name registrar Network Solutions, to capitalise on a shift by small and medium businesses from traditional marketing channels to online marketing. will pay Network Solutions $405 million (£247 million) in cash and issue 18 million shares of common stock, in addition to refinancing existing debt of Network Solutions.

Differing business models

Both and Network Solutions are domain name registrars but they have other complementary businesses in web services, online marketing, and e-commerce, targeted at small and medium businesses., for example, also sets up pages on Facebook for customers.

Even as the Internet has been a game-changing resource for consumers and large companies with the scale to tap enterprise marketing resources, there are many small business owners who could more fully leverage the growing adoption of online local search, social media and mobile devices to grow their businesses, said.

Small fish

The two companies had about 3 million paying subscribers, over 9 million domains under management, and more than 1,900 employees, at the end of June. The combined entity will compete with the likes of which claims that it currently manages over 48 million domain names for more than 9 million customers worldwide. acquired last year, a privately held provider of domain name registration, website design and management services, with over 800,000 subscribers.

The current transaction, which is subject to shareholder approval as well as customary regulatory approvals and closing conditions, is expected to be completed in the fall of 2011.

At the close, General Atlantic, the majority owner of Network Solutions, and other current Network Solutions shareholders are expected to own about 37 percent of