Published on: October 17, 2018
Acquisition of ZenMate
The acquisition of ZenMate for €4.8 million increases Kape’s share of the VPN (virtual private network) market, extends its footprint in Europe and brings the prospect of revenue and cost synergies. Based in Berlin, ZenMate is a multi-platform security software business with a focus on the provision of VPN solutions; highly complementary to Kape’s existing CyberGhost business. A more tactical acquisition compared to previous deals, the purchase presents opportunities to reap the benefits of significant restructuring (relative to a previously loss-making position). The group has the potential to realise synergy benefits through additional sales, a lower cost structure and the application of Kape’s skill in efficient online marketing. The Group aims to return ZenMate to profitability in the next quarter and expects the acquisition to be earnings accretive in the first full year of ownership. The deal is funded from Kape’s existing cash resources. We are increasing our estimate for FY 2019E Adjusted EBITDA by 3% to reflect our initial view of the impact of ZenMate.