Network security software company Kape (AIM: KAPE), controlled by Teddy Sagi, has announced the proposed acquisition of US company LTMI Holdings in a cash and shares deal worth a total of $127.6 million.
LTMI is the holding company of digital privacy company Private Internet Access, which has over 1 million paying customers for its VPN service. PIA employs 65 people, one third of them in research and development.
Kape will acquire LTMI from its co-founders and shareholders Andrew Lee and Steve DeProspero for $95.5 million, consisting of $52.9 million in cash and 42,701,548 new Kape ordinary shares, payable in three instalments over two years. On completion, Kape will also repay LTMI's existing debt of approximately $32.1 million, resulting in a total enterprise value for LTMI of approximately US$127.6 million.
This is the largest acquisition made by Kape, which was founded in 2011 and acquired by Sagi in early 2013 for $37 million. Kape was floated on London's AIM exchange in late 2014. It has a current market cap of $142 million. Sagi holds 73% of the company. His holding will be diluted to 55.9% following the acquisition of LTMI. Sagi holds Kape though Unikmind, which will provide debt finance for the acquisition.
Kape CEO Ido Erlichman said, "This is a game changing moment in Kape's development and we are thrilled to announce the proposed acquisition of Private Internet Access, a pioneer in the provision of digital privacy. This transaction will be transformational for our business, enabling Kape to aggressively expand our footprint in North America, broaden our product offering, further strengthen our recurring revenue base and, gain access to an extremely rich pool of talent.
"This transaction makes our vision a reality by creating one of the most prominent privacy companies globally. In one acquisition, I believe we have positioned Kape to fast become one of the leading digital privacy service providers in the world, empowering consumers to manage their own data and digital security."
Published by Globes, Israel business news - en.globes.co.il - on November 19, 2019
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