TIDMCROS
RNS Number : 3419Z
Crossrider plc
14 March 2017
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014
14 March 2017
Crossrider plc
("Crossrider" or the "Company")
Acquisition of leading cyber security SaaS solution
Crossrider (AIM: CROS), the online distribution and digital
product company, is pleased to announce the acquisition of the
entire issued share capital of CyberGhost SRL ("CyberGhost") for an
initial consideration of EUR3.2 million in cash, EUR3.0 million
through the issue of 4,057,813 options over ordinary shares
exercisable at nominal value and an EBITDA based earn-out payment
capped at EUR3.0 million (the "Acquisition").
CyberGhost is a leading cyber security SaaS provider, with a
focus on the provision of virtual private network ("VPN")
solutions. The Acquisition is expected to be earnings enhancing in
the current financial year. In the year to 31 December 2016,
CyberGhost generated EBITDA of $1.0 million(1) and significant
levels of recurring revenues from subscribers.
Rationale and benefits of the Acquisition
The Acquisition is in line with the Company's stated strategy to
broaden its product offering to service high growth consumer
markets, of which cyber security is a key vertical.
The acquisition of CyberGhost brings significant strategic
benefits to Crossrider, namely:
-- Expanding the Company's footprint in the high growth cyber security market
-- Increasing Crossrider's user base, delivering an average of
c.145,000 paying subscribers per month, with a low churn rate and
c.1.5 million active users per month
-- CyberGhost's market-leading software, which is compatible
with iOS, Android, Windows and Mac devices
-- Synergies between CyberGhost and Crossrider's App Distribution and Media divisions
-- Economies of scale with Crossrider's existing App
Distribution platform; integration of CyberGhost is expected to
accelerate its current sales pipeline whilst also improving
operating margin
The global VPN market is growing rapidly with the usage of
mobile VPN in particular continuing to increase with projected CAGR
of 21% for 2017-2022(2) . CyberGhost's solution focuses on
safeguarding personal information when browsing the Internet
through unsecured mobile hotspot; its customer base growth is
mainly due to the growing concerns around data security and safety.
The board believes this burgeoning market offers significant
opportunity for future profit growth and product expansion.
Details of the Acquisition
CyberGhost is being acquired for a total consideration of up to
EUR9.2 million, details of which are set out below.
Of the EUR9.2 million maximum consideration, the initial
consideration is to be satisfied on closing of the Acquisition by a
EUR3.2 million cash payment to the vendor of CyberGhost and EUR3.0
million through the issue of 4,057,813 options over ordinary shares
in the capital of the Company ("Ordinary Shares") exercisable at
the nominal value of the shares ("Consideration Options"). The
Consideration Options are exercisable in two equal portions on the
second and third anniversary of completion of the Acquisition and
if exercised in full, would represent 2.87% of the existing issued
share capital of the Company. The earn-out of up to EUR3.0 million,
which is payable subject to the continued involvement of Robert
Knapp, CEO and founder of CyberGhost, is to be satisfied in cash
and on a euro for euro basis for the EBITDA of CyberGhost for the
12 month period post completion subject to an aggregate cap of
EUR3.0 million.
CyberGhost's Founder and CEO, Robert Knapp, will continue to
manage and grow the business under Crossrider's ownership.
Ido Erlichman, Chief Executive Officer of Crossrider,
commented:
"The acquisition of CyberGhost is closely aligned with our
stated strategy to develop our B2C market reach and we are
particularly excited to be able to provide the best in class
privacy solutions to millions of users worldwide.
"Crossrider's expansion in the cyber security arena is
strategically very significant given its scale and the growth
opportunity it presents. We are thrilled to join forces with
CyberGhost's highly experienced team and look forward to growing
our reach together. This is an exciting step in the development of
our business and marks another important milestone in our
transformation into a highly scalable, online distribution
platform."
Robert Knapp Founder and CEO CyberGhost, commented:
"Crossrider is the perfect partner for CyberGhost - we have
ambitions to grow rapidly and we share this spirit with the
Crossrider team. Combining CyberGhost's cutting edge
Privacy-as-a-Service solution with Crossrider's reach to a wide and
carefully targeted audience of potential customers should enable us
to scale up quickly as well as bringing significant value to both
our employees and clients. We look forward to accelerating our
mission to provide all online users with a secure and private
internet connection through our market-leading service and now as
part of the Crossrider team."
1 - Based on unaudited accounts for calendar year 2016, based on
local GAAP and likely to be adjusted when converted to IFRS
2 - Global Mobile VPN Market Size, Share, Development, Growth
and Demand Forecast to 2022 - Industry Insights by Industry, by
Distribution Channel. Source: P&S Market research (January
2017)
Enquiries:
Crossrider plc via Vigo Communications
Ido Erlichman, Chief Executive
Officer
Moran Laufer, Chief Financial Officer
Shore Capital (Nominated Adviser
& Broker) +44 (0)20 3772
Bidhi Bhoma / Toby Gibbs 2496
Vigo Communications (Financial
Public Relations)
Jeremy Garcia / Fiona Henson /
Antonia Pollock +44 (0)20 7830
crossrider@vigocomms.com 9700
About Crossrider
Crossrider is an online distribution and digital product
company. The Company utilises its proprietary marketing technology
platforms to prospect, optimise and monetise mobile and web media,
to create a superb user experience. The Company offers improved
retention and re-engagement rates, greatly enhancing the value of
user activity. Crossrider provides its platforms to its customers
for use with their products as well as developing and expanding its
own product portfolio. Crossrider's vision is to provide and
develop best-in-class digital products for its users globally.
www.crossrider.com
About CyberGhost
Founded in 2011 in Bucharest, Romania, CyberGhost SA is one of
the leading VPN suppliers worldwide.
The company consists of 45 employees, a highly skilled
development team in Germany and a team of marketing and IT experts
in the company's headquarters in Bucharest, Romania. The company
aims to provide the best and most effective Internet security
measure to its one million and a half monthly active users.
http://www.cyberghostvpn.com
This information is provided by RNS
The company news service from the London Stock Exchange
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