Zix to Acquire AppRiver for $275 Million in Cash
Email security solutions provider Zix on Tuesday announced that it has entered a definitive agreement to acquire AppRiver, a company that specializes in cloud-based cybersecurity and productivity services.
Zix will pay $275 million in cash for AppRiver, but the acquisition is expected to result in an annual recurring revenue of $180 million and an organic growth of 11-15% year-over-year in FY 2019.
Founded in 2002, AppRiver provides cloud-based web protection, email encryption, and secure archiving solutions that are used by over 60,000 companies around the world, with support from 4,500 managed service provider (MSP) resellers.
According to Zix, the AppRiver acquisition will help it improve its threat protection offering, expand its customer base, and accelerate its go-to-market strategy via AppRiver’s many channel partners.
“From a cross-selling standpoint, the acquisition provides attractive and abundant synergies at the onset, including the opportunity to drive stronger attach rates by attaching Zix’s solutions to AppRiver’s customer base, while also leveraging the lead generation potential of AppRiver’s Microsoft Office 365 suite to attach additional products to Zix’s installed base of customers,” said Zix CEO David Wagner.
“Financially, we expect to be able to realize approximately $8 million of cost savings from the combined business within approximately the first 12 to 18 months after closing, while also achieving significant scale and a larger footprint. In fact, the acquisition of AppRiver should more than double our revenue and adjusted EBITDA and scale our annual recurring revenue to more than $180 million, enabling us to maintain our ongoing commitment to profitable growth and prudent capital allocation objectives. Overall, this acquisition provides Zix with a more robust platform to further expand our growth and profitability, drive higher attach rates, scale our customer retention, and capture greater share of the multi-billion-dollar business communications market,” Wagner added.
Zix has also made some financing-related announcements, including a $100 million convertible preferred equity commitment from True Wind Capital and a $200 million debt commitment from SunTrust Bank and KeyBanc Capital Markets.