GoDaddy Shares Surge On Gen Digital's Reported Takeover Bid — GEN Stock Falls As Talks in Early Stages

According to the Financial Times, Gen Digital has approached GoDaddy about a takeover, but discussions remain at an early stage and there is no certainty they will result in a deal.

• The FT report did not disclose financial terms of the potential transaction.
• The initial approach was reportedly made in recent weeks and discussions remain at an early stage.
• A combination would bring together GoDaddy’s domains, hosting and payments business with Gen Digital’s Norton, Avast and LifeLock cybersecurity portfolio.

GoDaddy Inc. (GDDY) shares spiked as much as 11% Thursday after it was reported that Gen Digital Inc. (GEN), the company behind Norton and Avast, had made a takeover approach for the web-services company.

Gen Digital made its first approach to GoDaddy in recent weeks. Discussions between the companies are still at an early stage and there is no guarantee the approach will ultimately lead to a transaction, the Financial Times reported, citing people familiar with the matter.

The report did not disclose the financial terms of Gen Digital’s approach. A potential transaction would bring together businesses operating in different areas of the consumer internet market. GEN stock was down nearly 8% at the time of this writing.

GoDaddy provides domain registration, website hosting, website-building tools and payments services, primarily for small businesses and individual customers. Gen Digital owns consumer cybersecurity and identity-protection brands including Norton, Avast and LifeLock. 

Stocks Have Been Under Pressure

Both companies entered Thursday after sharp losses earlier in the week. GDDY fell more than 7% in the last two sessions, while GEN stock tanked as much as 10% over this period.

Divergent moves between takeover targets and prospective buyers are common around acquisition announcements. Targets often gain on the takeover premium, while buyers can lag as investors weigh deal economics. That may not explain this move, though, since the FT report did not disclose terms or financing.

Retail Sentiment Around GDDY and GEN

At the time of this writing, retail investor sentiment around GDDY stock on Stocktwits was ‘neutral’, while sentiment around GEN stock remained ‘bearish’

So far this year, GDDY stock has fallen more than 15%. In comparison, the Invesco S&P 500 Equal Weight Technology ETF (RSPT), which holds the stock, has risen over 43% during this period.

Meanwhile, GEN stock has fallen more than 5% year-to-date. In comparison, the Global X Cybersecurity ETF (BUG), which holds GEN shares, has soared more than 57% over the same period.

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