TIDMKAPE
RNS Number : 7861V
Kape Technologies PLC
15 December 2021
15 December 2021
Kape Technologies plc
("Kape" or the "Group")
Completion of ExpressVPN Acquisition;
Issue of Equity; and Business Update
-- Revenues expected to be at the upper end of the US$197-202
million range with Adjusted EBITDA of between US$73-$76 million for
FY 2021
-- Substantial paying subscriber growth in enlarged group to over 6.5 million
-- Kape's lender group has given its consent to the Acquisition;
extended revolving credit facility to US$80 million
-- Acquisition anticipated to be highly earnings accretive -
approximately 28% - with FY 2022 guidance of revenue of between
US$610-624 million and Adjusted EBITDA(2) of between US$166-172
million
Kape (AIM: KAPE), the digital security and privacy software
business, is pleased to confirm that completion of the acquisition
of ExpressVPN for a total consideration of approximately US$936(1)
million (the "Acquisition") is expected to occur on 16 December
2021. Further details of the Acquisition are contained in Kape's
announcement made on 13 September 2021.
ExpressVPN is one of the most recognised brands in the digital
privacy space and the Acquisition creates a premium digital privacy
and security player best-positioned to serve the growing demand for
digital privacy.
The Acquisition delivers substantial operational benefits to
Kape. The enlarged group will have significant scale, servicing
over 6.5 million paying subscribers, having achieved substantial
growth since the date of signing. With an average aggregated
retention rate of 82%(3) , presenting considerable cross-sell and
additional revenue opportunities throughout the platform. In
addition, ExpressVPN's first-rate management and c. 290 team
members are joining Kape, bringing deep expertise in the digital
privacy sphere. ExpressVPN also brings a robust network of channel
partners, further strengthening the enlarged group's go-to-market
capabilities.
The Acquisition is anticipated to be highly earnings enhancing,
with the enlarged group expected to generate revenues for the year
ended 31 December 2022 of between US$610-624 million and Adjusted
EBITDA(2) of between US$166-172 million, with earnings accretion of
approximately 28%.
Kape's lender group, comprised of Bank of Ireland, Barclays Bank
PLC, Citi Commercial Bank, Citizens Bank, BNP Paribas and Leumi
Bank, has given its consent to the Acquisition and extended their
revolving credit facility to Kape from US$10 million to US$80
million.
The Group continues to trade in-line with management
expectations for the current financial year, with revenues expected
to be at the upper end of the US$197-202 million range and Adjusted
EBITDA of between US$73-$76 million for the year ended 31 December
2021, excluding the contribution of ExpressVPN.
Ido Erlichman, Chief Executive Officer of Kape, commented:
"This game-changing partnership will transform our business,
creating a leading pure-play consumer-focused company with a
mission to safeguard consumers' digital lives.
"Our over six and a half million customers - and growing -
choose Kape's products every single day, and we are uniquely
positioned to generate value in this fast-growing space.
"We are looking forward to working with ExpressVPN's management
and the wider team to provide the most trusted solutions supporting
digital freedom and security globally."
Issue of Equity & Total Voting Rights
As announced on 13 September 2021, as part of the consideration
for the Acquisition, Kape is issuing 47,782,800 new ordinary shares
in the Company to the vendors of ExpressVPN (the "Consideration
Shares"). Application has been made for the Consideration Shares to
be admitted to trading on the AIM market of the London Stock
Exchange ("AIM") and it is expected that admission will take place
and trading in the Consideration Shares will commence from 8:00am
on 16 December 2021 ("Admission").
Following Admission, the total number of voting rights in Kape
will be 349,084,840, which is the figure which should be used by
shareholders as the denominator for the calculations by which they
will determine if they are required to notify their interest in, or
a change to their interest in, ordinary shares in the company
("Ordinary Shares") under the FCA's Disclosure and Transparency
Rules.
The Company holds 9,662,654 Ordinary Shares in treasury, the
voting rights to which have been waived. Therefore, following
Admission, the Company's issued share capital will consist of
358,747,494 Ordinary Shares.
Bonus Award
In connection with completion of the transformational
acquisitions during 2021 of ExpressVPN and Webselenese, the Kape
Remuneration Committee has approved an exceptional bonus award of
US$1.4 million to Ido Erlichman (CEO) and US$1.0 million to Moran
Laufer (CFO) (the "Acquisitions Bonus"). Each Acquisitions Bonus is
subject to clawback of up to 20% of the award, if certain
integration targets, scheduled to be completed during 2022, are not
met.
The grant of the Acquisitions Bonus is a related party
transaction under Rule 13 of the AIM Rules for Companies. The
Directors of the Company, excluding Ido Erlichman and Moran Laufer,
consider, having consulted the Company's Nominated Adviser, Shore
Capital & Corporate Limited, that the terms of the related
party transaction are fair and reasonable insofar as the Company's
shareholders are concerned.
(1) Based on the closing share price prior to the acquisition
signing date.US$ figures based on an assumed GBP/USD exchange rate
of US$1.38, being the rate prior to the acquisition signing
date.
(2) Adjusted EBITDA is a non-GAAP measure and a company specific
measure which excludes other operating income and expenses which
are considered to be one off and non-recurring in nature.
(3) As of 30 June 2021 on a six-month basis.
Enquiries:
Kape Technologies plc via Vigo Consulting
Ido Erlichman, Chief Executive Officer
Moran Laufer, Chief Financial Officer
Shore Capital (Nominated Adviser & Joint Broker)
Toby Gibbs / Mark Percy / James Thomas / Michael +44 (0)20 7408
McGloin 4090
Stifel (Joint Broker & Financial Adviser)
Alex Price / Brad Topchik / Alain Dobkin / +44 (0) 20 7710
Richard Short 7600
Cowen Inc. (F inancial Adviser ) +1 (917) 548
Gurinder Sidhu 1061
Vigo Consulting (Financial Public Relations)
Jeremy Garcia / Antonia Pollock +44 (0)20 7390
kape@vigoconsulting.com 0237
About Kape
Kape is a leading 'privacy-first' digital security software
provider to consumers. Through its range of privacy and security
products, Kape focusses on protecting consumers and their personal
data as they go about their daily digital lives.
On completion of the Acquisition, Kape will have over 6.5
million paying subscribers, supported by a team of over 730 people
across ten locations worldwide. Kape has a proven track record of
revenue and EBITDA growth, underpinned by a strong business model
which leverages our digital marketing expertise.
Through its subscription-based platform, Kape has fast
established a highly scalable SaaS-based operating model, geared
towards capitalising on the vast global consumer digital privacy
market.
www.kape.com
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