Popular digital privacy business ExpressVPN is set to be taken over in a $1 billion deal.

Headquartered in the British Virgin Islands, ExpressVPN is one of the most recognised brands in its sector. Serving more than three million customers, it generated revenue of around $279.4 million with adjusted EBITDA of $74.8m in 2020 – increases of 37% and 35% respectively.

UK cybersecurity business Kape Technologies, which is listed in London, intends to fund the acquisition from Access Global through a proposed $354m share placing offered to retail investors via the PrimaryBid platform, plus another $354m by means of an underwritten placing to institutional investors.

The enlarged group would service around 6m paying subscribers, with ExpressVPN’s management team – including co-founders Peter Burchhardt and Dan Pomerantz – continuing to lead its operation. The firm’s 290 employees, of which 48% are R&D engineers, would also join Kape.

Kape believes the deal would lead to cost savings of $19m in 2022 and $30m per year from 2023.

“In acquiring ExpressVPN, we are creating a business at the forefront of delivering to consumers worldwide the most advanced privacy and security solutions, empowering them to regain control of their digital lives,” said Kape CEO Ido Erlichman.

“We are thrilled that ExpressVPN will be joining Kape and believe that this transaction is testament to the strength of our existing business and growth strategy. 

“This acquisition is directly in line with our mission to provide a privacy-first end-to-end suite of services capable of capturing the increasing demand in the digital privacy market.

“With the quality of ExpressVPN’s people and products, combined with the scale of their business, this transaction ideally positions Kape to continue to expand our global footprint and product portfolio at a time when digital security and privacy has never been more important.”

The deal is for $354m in cash, to be satisfied by a combination of $334m payable on completion plus $20m in cash within six months of completion paid from excess cash of the buyer group.

In addition, $237m in shares will be issued to the ExpressVPN founding duo; while a deferred cash consideration of two instalments of $172.5m each will be paid 12 and 24 months post-completion.

Pomerantz said: “The ExpressVPN team is delighted to be joining the Kape Technologies family. It was essential to us that anyone we teamed up with shared our strong fundamental commitment to user privacy, and Kape has demonstrated that in spades through its family of brands. 

“With the infusion of Kape’s support, we’re excited to be able to accelerate our product development, deliver even more innovation to our users, and protect them from a wider range of threats.”