Kape Tech. Share Price (KAPE)

Especially given a very positive opinion piece this weekend.....

CONTINUATION .........

Kape will pay the vendors $95.5m consideration over the next two years and also repay PIA’s $32.1m existing debt. Kape had net cash of $36.4m at 30 June 2019 which can be used to pay off PIA’s debt, and plans to fund the initial $32.9m cash element of the deal through a $40m short-term debt facility (priced at 5 per cent above Libor) from its largest shareholder, Unikmind, a company owned by Tedi Sagi, the founder of the gambling software company Playtech (PTEC). Kape’s directors expect the combined business to generate proforma 2020 revenue of between $120m to $123m and underlying cash profit of between $35m to $38m. They also anticipate making $3.5m to $4.5m of cost savings in the first 12 months post completion.

2017 Bargain shares portfolio performance
Company name TIDM Opening offer price on 3.02.17 (p) Closing bid price on 22.11.19 (p) Dividends Total return (%)
Kape Technologies (formerly Crossrider) KAPE 47.9 122 3.55 162.1

END OF ARTICLE

Kape Technologies (KAPE:123p), a provider of cyber security software and a constituent of my 2017 Bargain Shares portfolio at 47.9p when the company was known as Crossrider, has pulled off a major earnings enhancing acquisition that sent its share price surging. It also vindicates my decision to recommend exploiting the glaring valuation anomaly on offer when the shares were priced at a bargain basement 70p only a couple of months ago (‘Exploit Kape’s valuation anomaly’, 18 Sep 2019).

Kape is paying $127.6m (£99m) for Colorado-based Private Internet Access (PIA), a leading provider of virtual private network (VPN) solutions that encrypt and secure internet connections and protect individuals' privacy and digital data. Founded a decade ago, PIA now has over 1m paying subscribers globally, of which almost half are based in the US. It’s an area of cyber security that Kape’s management know incredibly well.

Since acquiring CyberGhost, a leading cyber security software-as-a-service (SaaS) provider of VPNs, in March 2017, Kape has more than trebled its user base. Digital privacy is a fast-growing market that is worth $24bn globally and is expected to grow by 50 per cent by 2022, according to industry experts. It’s not difficult to understand why as the increasing occurrence of data breaches and phishing attacks by cyber fraudsters are making consumers more concerned about their own data privacy and the need to guard against identity theft.

Strategically, the acquisition offers multiple benefits for Kape. It doubles the company’s customer base to 2m subscribers, provides the business with a strong presence in North America, enhances its brand awareness (PIA features in Tech Radar’s top 10 VPN list as a good value proposition offering expert features), offers the opportunity to leverage Kape’s proprietary technology platform to deliver continued strong organic growth, and adds additional privacy products to Kape’s existing product suite: Plus Ultra – a software that speeds up internet connections; LibreBrowser – a completely private browser; and Private.sh – a private and encrypted search engine based on proprietary cryptography technology.

Importantly, it’s a sound deal financially for Kape’s shareholders as PIA has shown consistent revenue growth and cash conversion rates above 100 per cent, increasing annual revenue from $13.3m in 2014 to $47.4m in 2018 when the company produced cash profit of $14.7m. Last year, PIA generated operating cash flow of $16.3m, a cash conversion rate of 110 per cent.

Anyone with IC access able to post the content of ST's recommendation?? Thanks in advance

https://www.investorschronicle.co.uk/comment/2019/11/25/kape-s-transformational-acquisition/

nice :o))