Cloud-based solutions provider Endurance (EIGI)  is buying e-mail marketing specialist Constant Contact (CTCT) for $1.1 billion. Endurance CEO Hari Ravichandran said the deal will make his company substantially larger, but ultimately help the small businesses it serves.

"Endurance has always provided Web presence for small businesses, and as those businesses get bigger, they want to be able to engage their audience and provide them with a way to engage with them for additional marketing solutions," said Ravichandran. "Constant Contact is a leader in that space."  

Endurance International announced Monday that the two companies have entered into a definitive agreement under which Endurance will acquire all of Constant Contact's outstanding shares of common stock for $32 a share in cash. The value represents a multiple of 12 times 2015 estimated adjusted EBITDA, including cash on its balance sheet. The offer represents a premium of approximately 23% over Constant Contact's closing price of $26.10 on Oct. 30, 2015.

Ravichandran said the deal, which is expected to close in the first quarter of 2016, will create a subscriber base of over five million paying customers and extend the company's product line by adding Constant Contact's suite of online marketing tools such as email marketing, events management, social media integration, and contact management systems. He added that the transaction brings together two long-standing Massachusetts companies, both of which survived the internet bubble.

The company said the combination is expected to result in fiscal 2015 combined pro forma adjusted revenue of approximately $1.1 billion and adjusted EBITDA of approximately $350 million. As for fiscal 2016, the new company is expected to post pro forma adjusted revenue growth of approximately 10% to 12% and adjusted EBITDA of approximately $400 million.

"If you can help small business owners grow their business, if you can help them drive more revenue, more leads, more traffic to their site, that's very exciting for them," said Ravichandran. "This whole suite offered by Constant Contacts is right smack in the middle of that space."

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