AIM-listedannounced on Tuesday it is to purchase LTMI Holdings, owner of US-based digital privacy firm Private Internet Access (PIA), for $95.5 million.
Kape Technologies is to pay $52.9 million in cash, issue over 42.7 million in new Kape shares and pay off LTMI’s $32.1 million existing debt, valuing the US firm at $127.6 million.
Ido Erlichman, Chief Executive Officer of Kape, 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.”
Shares in Kape Technologies surged 35.71% to 104.5p during Tuesday morning trading
Ido Erlichman said: “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.”
He said: “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.”
Kape anticipates 90% earnings accretion in 2020 from the deal, a doubling of its existing customer base, and cost synergies of $3.5-4.5 million in the first 12 months.
Ted Kim, Chief Executive Officer of LTMI, said on the deal: "We are excited to join forces with Kape, and this transaction is a truly monumental milestone in realising PIA's vision of creating a privacy company with a mission to improve our customers' digital privacy and security worldwide.”
He added: “Being part of a publicly listed company enables anyone that values digital privacy and security to be part of our future journey. I look forward to working with the Kape team to create one of the leading digital privacy players globally."
The global digital privacy market is expected to grow to be worth about $248.26 billion by 2023 according to a report, as consumers grow more concerned about data ownership and data privacy.
The acquisition would mark Kape’s largest to date. It acquired VPN provider Cyber Ghost SA. in 2017 and VPN provider ZenMate.com for $5.6 million in 2018.
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