AppRiver also provides Microsoft Office 365 and Secure Hosted Exchange services, which serve as an effective lead generation tool for AppRiver’s solutions. We financed the acquisition with proceeds from (1) cash on hand, (2) the proceeds from the Term Loan, and (3) a private placement with an investment fund managed by True Wind Capital consisting of (i) 64,914 newly issued shares of Series A Convertible Preferred Stock, $1.00 par value per share, and (ii) 35,086 newly issued shares of Series B Convertible Preferred Stock, $1.00 par value per share in exchange for cash consideration in an aggregate amount of $100 million (which was reduced by $3 million in True Wind Capital’s costs that were reimbursed by the Company).ĪppRiver is a channel-first provider of cloud-based cyber security and productivity services, offering web protection, email encryption, secure archiving, and email continuity solutions. This acquisition complements our strategy to accelerate our offerings into the cloud at the point of initial cloud application purchase and expand our customer base. On February 20, 2019, Zix acquired 100% of the equity interest of AR Topco, LLC and its subsidiaries, including AppRiver LLC (“AppRiver” and collectively, the “AppRiver Companies”), for a total purchase price of $276.4 million, including cash consideration of $271.8 million, net of cash acquired , and subject to a customary working capital adjustment. The following table summarizes the estimated fair value of acquired assets and liabilities: Certain estimated values are not yet finalized and subject to revision as additional information becomes available and more detailed analyses are completed. The results of operations and the provisional fair values of the acquired assets and liabilities have been included in the accompanying condensed consolidated financial statements since our DeliverySlip acquisition on May 7, 2019. The intangible asset we acquired from DeliverySlip is technology which we are amortizing over 6 years. The majority of the goodwill balance is expected to be deductible for tax purposes. The goodwill from this transaction is not yet finalized. We accounted for the acquisition as the purchase of a business and recorded the excess purchase price as goodwill. Revenue from additional acquired customers of DeliverySlip for the three and six months ended Jwere immaterial. Prior to the acquisition, approximately 90% of DeliverySlip’s revenue was generated from AppRiver Canada Inc, which became a subsidiary of the Company upon closing of the AppRiver acquisition (as described below). The Company incurred $444 thousand and $476 thousand in acquisition-related costs with respect to the DeliverySlip acquisition, which were recorded within operating expenses during the three and six months ended June 30, 2019, respectively. The purchase of DeliverySlip expanded the Company’s production offering including email encryption, e-signatures and secure file solutions. The acquisition was partially financed with proceeds of $10 million from the Delayed Draw Term Loan Facility. Included in the cash consideration, a holdback amount of $1.5 million was transferred to an escrow agent for the satisfaction of the Seller’s indemnity and other obligations under the purchase agreement. The contingent consideration, to the extent earned, will be paid in full at the later of 90 days after the closing date or upon the fulfillment of certain agreed upon requirements. (“Seller”) and its wholly owned subsidiary DeliverySlip Inc.(“DeliverySlip”), related to the DeliverySlip product for a total purchase price of $13.8 million, including cash consideration of $11.4 million and a contingent consideration with an estimated fair value of $2.3 million at the acquisition date. On May 7, 2019, the Company acquired certain assets of Cirius Messaging Inc.
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