Synacor (SYNC) to Acquire Zimbra in $24.5M Deal

Synacor (Nasdaq: SYNC) announced it has entered into a definitive agreement to acquire certain assets from Zimbra, Inc., a global leader in open source email, calendaring, and collaboration software. The acquisition of Zimbra talent, technology and patents will extend Synacor's leadership in ISP solutions, will accelerate the company's expansion in enterprise and international markets, and will strengthen Synacor's financial profile and competitiveness.

"Email has been and continues to be important to our internet service provider customers, and has been a double-digit growth business for Synacor this year, driving portal traffic and monetization," said Synacor CEO Himesh Bhise. "We now have an even more compelling value proposition offering Zimbra's on-premise technology as well as Synacor's managed service solutions and advertising products."

The Zimbra acquisition will make Synacor the largest provider of ISP email solutions in the US. Combined, the company will serve 120+ ISP and CSP customers around the world and will accelerate Synacor's stated strategy to expand in international and enterprise markets. Zimbra brings hundreds of millions of free and paying users in 135+ countries, adds new customers to Synacor's roster including 2500+ small business customers and 900+ government customers, and adds a valuable network of 1000+ value added resellers and 500+ hosting partners. Synacor plans to continue the open source version of Zimbra and plans on providing technical support for Zimbra's Open Source Edition (OSE) through its VAR partners around the world.

"We are delighted to welcome the global Zimbra team of 140 people to the Synacor family," said Synacor CEO Himesh Bhise. "Together, we will deliver great experiences to hundreds of millions of email users across 135+ countries. We will invest in Zimbra's worldwide distribution platform of 1000+ value-added resellers and 500+ hosting providers to explore international growth for Synacor's portal, video and advertising products."

The addition of Zimbra will strengthen Synacor's financial profile, with the combined company positioned to grow profitably, expanding revenues across customer verticals and geographies, and monetizing diversified advertising, software licensing and managed service business models.

The Zimbra acquisition is expected to close within 45 days. The transaction is valued at approximately $24.5 million, with Synacor paying $17.3M in cash, issuing 3M shares, 0.6M warrants priced at $3.00 per share, and paying up to $2M in earn-outs over the next 18 months.

Synacor is raising full-year financial guidance to reflect the contribution of Zimbra, assuming the transaction closes before the fourth quarter.

Fiscal 2015 Guidance:

• Revenue for the full year 2015 is projected to be in the range of $102M - $108M, versus the previous guidance of $97M - $102M
• For the full year 2015, the company expects to report adjusted EBITDA of $4M - $6M, versus the recently increased guidance of $3.5M - $5M

*** The Street sees FY15 revenue of $100.9 million.

Related to the acquisition, Synacor has also amended its shareholder rights agreement, outlined on Form 8-K filed August 18, 2015. For more information on Synacor and its email and communications products, please visit synacor.com or email [email protected].

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