• by Ray Schultz , January 16, 2019

Email security firm Zix will acquire AppRiver, a provider of cloud-based cybersecurity tools, for $275 million in cash, the firm announced on Tuesday.

Zix expects to double its annual revenue to over $180 million with the purchase, and foresees 11% to 15% organic growth year-over-year for the combined businesses in fiscal 2019.

The company also hopes to realize $8 million in savings within 12 to 18 months after closing.

AppRiver serves over 60,000 companies, and is supported by a network of 4,500 managed service providers.

The merger combines Zix’s product delivery and AppRiver’s customer service capabilities, the company says.

“From a cross-selling standpoint, the acquisition provides attractive and abundant synergies at the onset,” states Zix CEO David Wagner.

He notes that “email is typically the first application that gets moved to the cloud,” and that this acquisition will help it facilitate its clients’ cloud migration.  

Zix has received a commitment from SunTrust Bank and KeyBanc Capital Markets for a new five-year $175 million term loan, which will be used to partially finance the AppRiver purchase, the firm says. It will also have a $25 million revolving credit facility that will be used for corporate purposes.

In addition, True Wind Capital will  invest $100 million at closing. At that timeJames H. Greene, Jr., founding partner of True Wind, and principal Brandon Van Buren will join its board. 

AppRiver launched its spam and anti-virus service in 2002. It has since added web protection, email encryption, secure archiving and email continuity tools.

The firm also provides Microsoft 365 an Secure Hosted Exchange services. 

On Tuesday, Zix also announced preliminary financial results for the fourth quarter and 2018 fiscal year. It anticipates quarterly revenue of $18.3 million to $18.4 million, up 10% from the same period in 2017, and annual revenue of $70.3 million, up from $65.7 million in the prior year.