Zix has closed its previously announced acquisition of AppRiver, a leading provider of cloud-based cybersecurity solutions, for $275 million in cash, subject to a customary working capital adjustment and reduction for outstanding AppRiver indebtedness, certain accrued items and transaction expenses.
“Today is a significant day for Zix and AppRiver employees, customers, partners, and shareholders, as we complete the acquisition of AppRiver and create one of the leading email and security solutions providers, particularly for the small and mid-size business market,” said David Wagner, Zix’s Chief Executive Officer. “Over the last three years we aligned our business with the growth drivers that are propelling our industry, especially our customers’ migration to the cloud, which is still in its early innings. This acquisition further strengthens that alignment by bolstering our security offerings, expanding our go-to-market channels, and providing a stronger cloud platform to drive even more value for our customers and partners. We’re excited to enter this new chapter of our value creation journey. We will focus on integrating the two businesses, accelerating our growth through channel partners and cross-selling, and increasing our profitability through cost synergies and improved attach rates.”
As previously announced, concurrent with the close of the acquisition, Zix entered into a credit agreement with a syndicate of financial institutions and SunTrust Bank, as administrative agent, for a new five-year $175 million term loan, a $10 million delayed draw term loan facility and a $25 million revolving credit facility. The company also secured a new $100 million convertible preferred equity investment from True Wind Capital. In connection with True Wind’s convertible preferred equity investment, Zix expanded its board of directors to eight members and appointed True Wind Founding Partner James H. Greene, Jr. and True Wind Principal Brandon Van Buren as directors.
As previously disclosed, the Annual Recurring Revenue (ARR) of the combined company (representing the projected future revenue to be generated over the ensuing 12-month period) is approximately $180 million at the time of closing. Zix is targeting ARR of approximately $200 million to $207 million for 2019, which represents an organic growth rate of approximately 11% to 15% year-over-year. Zix management is also expecting revenue of approximately $47 million to $50 million with a 24% adjusted EBITDA margin in the fourth quarter of 2019.
The company will provide more complete guidance on its fourth quarter and full year 2018 earnings call, scheduled for February 28, 2019.
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