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Zix To Acquire AppRiver For $275 Mln In Cash - Quick Facts

Zix Corp. (ZIXI) said Tuesday it has agreed to acquire AppRiver, a provider of cloud-based cybersecurity solutions for $275 million in cash.

AppRiver is a channel-first provider of cloud-based cybersecurity and productivity services, serving more than 60,000 companies worldwide and supported by a 4,500-strong Managed Service Provider or MSP reseller community.

AppRiver launched its flagship spam and virus service in 2002, and has since bolstered its suite of cloud-based security offerings with web protection, email encryption, secure archiving, and email continuity solutions.

AppRiver also provides Microsoft Office 365 and Secure Hosted Exchange services, which serve as an effective lead generation tool for the company's security solutions.

Zix noted that San Francisco-based private equity firm True Wind Capital will invest $100 million in a convertible preferred equity investment that will be funded contemporaneously with closing of the AppRiver acquisition. James Greene, Jr. (True Wind's Founding Partner) and Brandon Van Buren (Principal) will join Zix's board of directors at the closing.

Zix expects AppRiver to more than double its revenue and adjusted EBITDA, while scaling ARR to more than $180 million, which for the combined business is expected to grow organically at 11 percent to 15 percent year-over-year in fiscal 2019.

Zix said that approximately $8 million of cost savings are expected to be realized within the first 12 to 18 months following the acquisition close.

The Annual Recurring Revenue or ARR of the combined company, representing the projected future revenue to be generated over the ensuing 12-month period, is expected to be approximately $180 million at closing.

Zix is targeting ARR of about $200 million to $207 million at fiscal 2019 year end, representing a growth rate of approximately 11 percent to 15 percent year-over-year.

Zix's management is also expecting revenue of approximately $47 million to $50 million with a 24 percent adjusted EBITDA margin in the fourth quarter of 2019.

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