Kape's cyber software company, controlled by Teddy Sagi acquires American LTMI for $ 127.6 million

Kape's cyber software company, controlled by Teddy Sagi, acquires American LTMI, which owns Private Internet Access, for a total of $ 127.6 million.
As part of the deal, Kape will pay $ 95.5 million, with $ 52.5 million paid in cash and the balance of the shares, plus an outstanding $ 32.1 million LTMI debt. The purchase will be funded by shares from its cash fund and debt from its controlling shareholder Teddy Sagi, which will provide her with a $ 40 million owner's loan. After the acquisition is completed, the company plans to replace the owner's loan with a long-term external financing. The company expects consolidated revenues for 2020 to be between $ 120-123 million and projected EBITDA between $ 35-38 million.
Ido Earlichman, CEO of Kape: "This is a significant moment in Kape's development. The acquisition of LTMI is a turning point for us, and it will make us the big player in the US, expand our solution basket, strengthen our recurring revenue base and give us access to a rich talent pool. The deal makes our vision a reality in creating the world's most prominent digital privacy company with the brand "In a single acquisition, we have positioned Kape to enable it to quickly become one of the world's leading digital privacy service providers."
This is Kape's fourth acquisition since Erlichman took over as CEO in May 2016 and the largest in company history established in 2011, and was purchased by Sagi in early 2013 for $ 37 million. As a result of the acquisition, Sagi will be diluted to a holding of 55.9%.
The acquired LTMI company provides VPN (Virtual Private Network) solutions that specialize in providing secure and encrypted Internet access. In addition to a web anonymity solution, the company's product portfolio includes a private browser for iOS and Android users, which supports video and software that accelerates the speed of Internet browsing. Its 2018 revenue was $ 47.4 million (up 18% from 2017), and adjusted EBITDA was $ 14.7 million. The company claims the VPN market to roll $ 24 billion, and grow 50% to $ 36 billion by 2022.
The merged company is expected to rank among the world's top three VPN players, with as of 2019, the total expected merged company revenue is about $ 110 million and adjusted EBITDA was about $ 30 million.