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Kape Technologies (KAPE)


Monday 08 March, 2021

Kape Technologies

Acquisition of Webselenese

RNS Number : 4075R
Kape Technologies PLC
08 March 2021

This announcement contains inside information


8 March 2021


Kape Technologies plc

("Kape," the "Group" or the "Company")


Acquisition of Webselenese


Highly strategic acquisition bolsters Kape's go-to-market capabilities


Kape (AIM: KAPE), the consumer-focused digital privacy and security business, announces the acquisition of Webselenese Ltd. ("Webselenese"), a digital platform which provides independent and highly valued consumer privacy and security content to millions of users globally via market leading review sites. The total consideration for the acquisition is c. US$149.1 million (the "Acquisition") on a net cash basis.



· Provides Kape with one of the broadest audiences for consumer digital privacy and security

· Deepens Kape's go-to-market capabilities and ensures Kape is ahead of the market in consumer trends providing a competitive edge

· Brings Kape closer to the consumer - unrivalled insights and expertise will support Kape's product development roadmap

· Key pillar in Kape's strategic roadmap to become a world leader in consumer digital privacy and security

· Highly accretive acquisition with adjusted EPS increased by 65%, accelerates Kape's earnings growth with the enlarged group expected to generate on a reported basis 2021 revenues of US$197-202 million and adjusted EBITDA of US$73-76 million*


* Consolidating Webselenese as from the 5 March 2021, being the deal's closing date


Ido Erlichman, Chief Executive Officer of Kape, commented:


"The acquisition of Webselenese is highly strategic for Kape, providing us with one of the most respected and far-reaching consumer privacy and security content businesses globally. By combining this deep level of consumer knowhow with our fast-growing product footprint, we believe the acquisition will be a force multiplier for Kape in our product development and customer reach.


"This significantly earnings accretive acquisition accelerates our strategic objective of becoming the go-to brand for consumer privacy and security globally."


Ran Greenberg, and Ariel Hochstadt, Co-founders of Webselenese, added:


"After working with Kape over the last few years we are excited to join forces to create a company which will be able to deliver on its promise to promote and provide digital privacy and security to consumers worldwide."


Investor and analyst audio webcast


Kape Technologies plc will today host an audio webcast for analysts and investors at 12.30 p.m. GMT. In order to join, click on the below link.


Audio webcast:


About Webselenese

In the last ten years, Webselenese, which is based in Tel Aviv has built up an independent privacy and security focused content platform that attracts over eight and a half million unique monthly readers1 in over 30 languages, with a particularly strong readership in North America. It has become a leading destination for consumers looking to understand consumer privacy and security trends in the digital world, as well as being an important platform for brands to reach relevant consumers. Webselenese's unique insight driven content platform, together with its proprietary technologies and knowhow, has become an important platform to reach relevant consumers.


Webselenese's mission is to provide honest and unbiased information via its well-regarded websites that have received thousands of positive user generated reviews. Webselenese was founded with the goal to provide best in-class consumer focused privacy and security related news and product information to users across the globe. Its team of researchers extensively research and test every product before reviewing and recommending it, in doing this, Webselenese only recommends products and services that its writers would use themselves, providing it with a key competitive advantage that has attracted a range of featured vendors (including Kape, McAfee, NortonLifeLock and Dashlane).


Through its global infrastructure, Webselenese has built a unique insight-driven content platform specifically designed to attract readers organically with over 105 million readers in 2020. This knowledge and technology will provide Kape with a unique competitive advantage in growing sales of its product suite.


Webselenese has a track record of significant organic growth, and in the year ended 31 December 2020 generated unaudited revenues of c. US$64.5 million, an increase of 91% (2019: US$33.8 million) and unaudited EBITDA of c. US$30.7 million, up 204% (2019: US$10.1 million).


The Acquisition is a key strategic milestone in positioning the Company as the go-to brand in the global consumer privacy and security arena and seeks to build on an existing partnership that has been in place for a number of years. Webselenese's unrivalled level of market understanding and consumer feedback will support Kape's ongoing product development and organic user growth.


The business is wholly owned by co-founders Ran Greenberg and Ariel Hochstadt and has 29 employees together with hundreds of dedicated service providers, primarily writers, around the world.


1 Average monthly readership in 2020


Transaction rationale

Kape anticipates that the Acquisition will support and improve the Group's organic growth prospects in the fast-growing consumer digital privacy and security markets through:


· Elevating Kape as a leading force across the global consumer privacy and security arena

o The Acquisition provides access to one of the broadest consumer privacy audiences globally. Webselenese attracted over 105 million readers in 2020 across a high growth sector and grew its readership by 62% compared to 2019

o Webselenese is a key educational platform, supporting Kape's mission of providing the best digital privacy and security solutions for consumers


· Supporting Kape's product and broader software portfolio development

o With such a broad reach, Webselenese will provide Kape with valuable insights, trends and feedback from which to focus the Group's product development efforts


· The enlarged group benefitting from Webselenese's highly attractive financial profile

o Webselenese is highly cash generative, with 96.6% operational cash flow from net profit

o The Board expects the enlarged group to generate in 2021, on a full year pro-forma basis, revenues of between US$208-213 million, and Adjusted EBITDA of between US$78-81 million

o On a reported basis as from the date of closing, the enlarged group is expected to generate 2021 revenues of US$197-202 million and Adjusted EBITDA of between US$73-76 million


· Retaining Webselenese's highly experienced management team

o Co-founders Ran Greenberg - an entrepreneur with extensive expertise in building digital businesses; and Ariel Hochstadt - a former Google executive with vast experience in consumer buying behaviours - will continue to run Webselenese's operations with complete editorial independence along with their highly skilled team, expanding Webselenese's activities within the security space

o Ran Greenberg and Ariel Hochstadt will together hold 5.44% of Kape's shares immediately following the Acquisition


Transaction summary

Kape will acquire Uma Capital Ltd and Ani Ariel Ltd, which are the owners of Webselenese, for a total consideration of c. US$149.1 million (the "Consideration") to be satisfied by a combination of c. US$116.6 million in cash and c. US$32.5 million in new shares, amounting to 12.1 million Kape ordinary shares ("Consideration Shares").


Out of the cash consideration Webselenese's founders will use circa US$1.34 million to purchase Kape Shares in the market following the close of the transaction.


The cash element of the Consideration will be funded through a combination of US$32.5 million of Kape's own cash resources and US$85 million) drawn down under a US$120 million bridge facility (the "Bridge Loan") made available by TS Next Level Investments Limited, an affiliate of Unikmind Holdings Limited, Kape's majority shareholder


Following consent received from Kape's existing lender group (the "Banks"), the Company's existing US$40 million term facility and US$10 million revolving credit facility will remain in place and available. Under the terms agreed with the Banks, Kape has a period of 90 days to agree a new upsized facility to refinance the Bridge Loan in full, absent which the existing term facility and revolving credit facility will become repayable. In such eventuality, the remaining US$35m available under the Bridge Loan will be drawn and, together with Kape's own cash resources for the balance, will be applied to repay the Banks in full. Further details of the Bridge Loan, which is a related party transaction, are set out below. The Bridge Loan has been entered into in order to facilitate timely completion of the Acquisition.


Kape intends to re-finance the Bridge Loan with new facilities from the Banks as soon as practicable. The Company expects net leverage to be circa 1.6x pro forma for the Transaction. It is the Company's intention to maintain low   levels of financial indebtedness.


Kape intends to report Webselenese as a separate division going forward.


Notice of General Meeting

In order to obtain shareholders' authority to issue the Consideration Shares, a circular containing notice of a general meeting of the Company will shortly be sent to shareholders. The circular will include resolutions to authorise the directors of the Company to issue the Consideration Shares and to refresh the directors' general authorities to allot shares and to issue shares for cash consideration other than on a pre-emptive basis. Unikmind, which has an interest in approximately 64.3 per cent. of the issued share capital of the Company , has provided an irrevocable commitment to vote in favour of the resolutions to be proposed at the general meeting.


The general meeting timing will be announced in due course, with the Consideration Shares then expected to be issued the following day.


Related Party Transaction

Kape has entered into a binding commitment letter with TS Next Level Investments Limited ("TSNLI") under which TSNLI has committed, subject to limited conditions, to provide to Kape the Bridge Loan of up to US$120 million in aggregate.


The Bridge Loan will carry a fixed coupon of 6.0% per annum payable on funds drawn and an arrangement fee of 1.0%. The Bridge Loan is subordinated to Kape's existing bank facilities and is repayable no later than 31 December 2021 (which may be extended to 30 April 2022 at the sole discretion of Kape). The Bridge Loan may be repaid at any time in whole or part by Kape without penalty. The Bridge Loan is currently unsecured, but in the event that it is still outstanding after 90 days, customary security over the shares held by Kape in KLTM5 Holdings Inc., UMA Capital Ltd and ANI Ariel Ltd will be granted to TSNLI. The Bridge Loan also includes certain customary obligations on Kape in relation to TSNLI's costs and expenses and in relation to taxes.


The independent directors of Kape (being for this purpose Don Elgie, Ido Erlichman, Moran Laufer, David Cotterell and Martin Blair) consider, having consulted with the Company's nominated adviser, that the terms of the Bridge Loan and the related security are fair and reasonable insofar as the Company's shareholders are concerned.




Kape Technologies plc

Ido Erlichman, Chief Executive Officer

Moran Laufer, Chief Financial Officer


via Vigo Communications

Shore Capital (Nominated Adviser & Broker)

Mark Percy / Toby Gibbs / James Thomas / Michael McGloin


+44 (0)20 7408 4090

Stifel Nicolaus Europe Limited (Joint Broker)

Alex Price / Brad Topchik / Alain Dobkin / Richard Short


+44 (0) 20 7710 7600

Vigo Communications (Financial Public Relations)

Jeremy Garcia / Antonia Pollock

[email protected]

+44 (0)20 7390 0237



About Kape

Kape is a leading 'privacy-first' digital security software provider to consumers. Through its range of privacy and security products, Kape focuses on protecting consumers and their personal data as they go about their daily digital lives.


To date, Kape has over 2.5 million paying subscribers, supported by a team of over 350 people across eight locations worldwide.


Through its subscription-based platform, Kape has fast established a highly scalable SaaS-based operating model, geared towards serving the vast global consumer digital privacy market.  

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