ExpressVPN sells to Kape Technologies for $936 million

Kape Technologies has announced it will pick up ExpressVPN for $936 million, consisting of $237 million in Kape shares to ExpressVPN co-founders Peter Burchhardt and Dan Pomerantz, which will hand them a 14% stake in the combined entity, with the remainder to be paid in cash over the next two years.

ExpressVPN said it would remain a separate service, and its team would continue to grow. Of its approximately 290 employees, ExpressVPN has 48% involved in research and development. Kape called out ExpressVPN’s OEM arrangements with HP, HMD Global, Acer, Dynabook, and Philips.

The VPN service has over 3 million customers, with over 40% in North America. During the 2020 fiscal year, ExpressVPN posted revenue of $279 million, up 37%, and adjusted EBITDA of $75 million, up 35%, Kape said in its regulatory filing.

“Significant cross sell and revenue opportunities across the platform; top line and operational synergies greatly improve [customer lifetime value to acquisition cost] ratios and are anticipated to generate cost savings of $19 million in 2022 and $30 million on an annualised cost basis from 2023,” Kape said.

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Cross-selling aside, ExpressVPN claimed it would be able to provide better protection from a “wider range of threats”.

“We’ve been impressed by Kape’s clear commitment to protecting the privacy of users,” ExpressVPN said in a blog post.

“Their track record with upholding the exacting privacy practices and policies of other privacy protection services under the Kape umbrella is a strong testament to how seriously they take their responsibility to respect user privacy and rights.”

In total, the combined company will have around 6 million paying subscribers.

This is not Kape’s first VPN purchase — it previously bought VPN companies ZenMate and Cyberghost, and used to specialise in scareware under the Crossrider name.

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