Kape Technologies have announced that they are planning to expand their VPN empire after making a move to acquire LTMI Holdings, the holding company of Private Internet Access.
As regular readers may recall, Kape Technology already own CyberGhost VPN and ZenMate VPN as well as a number of other online security tools. The move is part of Kape’s strategy of establishing itself as the go-to online privacy provider for customers around the world.
Details of the acquisition
The purchase of Private Internet Access is not coming cheap. Kape will be paying a total of US$127.6 million in a combination of cash and shares for a business which has more than a million paying customers, with almost half (48%) being based in the US market.
It is a bold step for Kape Technologies which will see the number of paying customers on their books double to more than 2 million.
The move will see Kape pay of LTMI Holdings existing debts of US$32.1 million. But they will be financing the move with a US$40 million short-term debt facility from their main shareholder. LTMI’s CEO, Ted Kim, will be joining the board of Kape as a non-executive director as well as heading up their now significantly expanded North American division.
Some might be concerned that Kape are overstretching themselves with this move but they note with bullish confidence that the digital privacy market is already worth US$24 billion this year and it is expected to grow by a further 50% over the next three years.
They note that they expect the new business to be profitable immediately and predict revenues of more US$120 million in 2020.
The purchase of LTMI Holdings also sees Kape Technologies take control of a number of other privacy tools including LibreBrowser, a completely private browser, Private.sh, a private and encrypted search engine, and Plus Ultra, a software that speeds up internet connections.
What they are saying
Needless to say, both parties involved in this acquisition were enthusiastic about the move and the future for Kape Technologies.
Ido Erlichman, Chief Executive Officer of Kape, said, “This is a game-changing moment for both Kape and Private Internet Access, transforming our vision of creating a truly global privacy company into a reality… In one acquisition, I believe we have positioned Kape to fast become one of the leading digital privacy service providers in the world.”
Ted Kim seconded these comments, adding “We are excited to join forces with Kape to create a true pioneer in digital privacy with significant scale.”
The acquisition has not been formally completed yet and a full announcement will be made once formalities have been confirmed. But it does seem that the deal has been done and Kape’s footprint in the VPN world now extends to three of the most prominent providers on the market.
While the markets have reacted positively to the announcement, with Kape shares rising on the back of the news, customer reactions have been more mixed with many wary about new ownership might mean to the service provided by Private Internet Access.
What this acquisition means for the VPN services
There has been no formal announcement of how the new business will operate. But Kape already owns two VPNs in CyberGhost VPN and ZenMate VPN. It has owned both for more than a year and shown no sign of amalgamating their services or making significant changes to either.
This suggests that for Private Internet Access customers, it will mean business as usual, at least in the short-term.
This is Kape’s biggest acquisition to date and a real statement of intent from them. It is possible that they could choose to bring their different VPNs together at some point, particularly given their renewed focus on the North American markets.
If there are any changes to the service or policies they offer to users, or if there is talk about amalgamating the different services, you will read about it here first.