Email security company Zix has announced that it has entered a definitive agreement to buy cloud-based cybersecurity company AppRiver for $275 million in cash. The combined companies are expecting to hit more than $180 million in annual recurring revenue and $8 million in cost savings within 12-18 months after closing.
AppRiver launched its flagship spam and virus service in 2002 and has bolstered its su
ite of cloud-based security offerings with web protection, email encryption, email continuity solutions, and secure archiving. Plus AppRiver provides Microsoft Office 365 and Secure Hosted Exchange services. And AppRiver currently serves more than 60,000 companies worldwide and is supported by 4,500 Managed Service Provider (MSP) resellers.
“Over the past two years, Zix has been successfully executing on its strategy of becoming a leading provider of email security for compliance,” said Zix CEO David Wagner. “We have demonstrated strong and increasing attach rates in our solutions, have driven higher New First Year Orders growth, and have consistently been delivering industry-leading customer support by helping our customers more holistically with the security challenges they are facing, especially as it relates to migrating to the cloud.”
Zix is targeting an annual revenue rate of about $200 million to $207 million by the end of the year, which represents a growth rate of about 11% to 15% year-over-year.
True Wind Capital is also going to invest $100 million in a convertible preferred equity investment that will be funded contemporaneously following the closing of the AppRiver acquisition. And Jamie Greene and Brandon Van Buren of True Wind Capital are joining Zix’s board of directors at the closing.
Zix also received a commitment letter from SunTrust Bank and KeyBanc Capital Markets with regard to a new five-year $175 million term loan and $25 million revolving credit facility. The debt financing is expected to close simultaneously with the closing of the AppRiver acquisition.
