Kape Technologies (LON: KAPE) have seen their shares rally on Tuesday after it was reported that a deal was agreed to purchase Private Internet Access (PIA).
Kape shares rallied 32.6% to 102p on Tuesday. 19/11/19 12:09BST.
Shareholders should be pleased with the results following the gains made by competitors, in a market which is becoming increasingly competitive and saturated.
Intelligent Ultrasound (LON: MED) have made developments in AI Software, whilst Sophos Group (LON: SOPH) saw their shares rally after a strong update.
Kape provide privacy focused security software, and operates through three segments: App Distribution, Media and Web Apps.
Kape have become very excited about the new acquisition and have informed shareholders that the merger will create a new global cyber company which should double profits.
The AIM (INDEXFTSE: AXX) listed firm secured a deal which will cost £74 million.
PIA, which was established in Colorado in 2009, specialises in so-called virtual private networks (VPN), which allow users to set up an encrypted internet connection.
“This is a game-changing moment in Kape’s development,” said Kape chief executive Ido Erlichman.
“This transaction will be transformational for our business, enabling Kape to aggressively expand our footprint in North America, broaden our product offering, further strengthen our recurring revenue base and gain access to an extremely rich pool of talent.”
Kape expects the deal to boost earnings by 90% by the end of 2020, with the new titan set to report revenues between $120 million and $123 million.
As part of the deal, LTMI’s management will join the London firm, with chief executive Ted Kim taking over the combined company’s operations in North America.
“We are excited to join forces with Kape, and this transaction is a truly monumental milestone in realising PIA’s vision of creating a privacy company with a mission to improve our customers’ digital privacy and security worldwide,” Kim said.
This deal should spark shareholder optimism, and if Kape deliver the expectations that they have forecasted then shareholders will see both strong trading figures and impressivee returns.