SSH COMMUNICATIONS SECURITY CORPORATION’S SUBSIDIARY KYBERLEIJONA ACQUIRES DELTAGON, A COMPANY SPECIALIZING IN SECURE MESSAGING

SSH Communications Security Corporation, stock exchange release, January 29, 2021, 1225 EET

SSH COMMUNICATIONS SECURITY CORPORATION’S SUBSIDIARY KYBERLEIJONA ACQUIRES DELTAGON, A COMPANY SPECIALIZING IN SECURE MESSAGING

SSH Communications Security Corporation’s subsidiary Kyberleijona Oy has agreed to acquire all shares of Deltagon Oy from Leijonaverkot Oy, a subsidiary of Suomen Erillisverkot Oy.

Background of the acquisition

The acquisition strengthens SSH’s position as a provider of secure networking and messaging solutions that safeguard key national cybersecurity interests and offer security-critical networking, encryption, and other solutions to the public sector in a coordinated manner. The acquisition also supports SSH’s aim to build a core national cybersecurity and cryptography competence center around its NQX business.

After closing, Deltagon becomes a subsidiary of Kyberleijona and part of the SSH group. SSH will consolidate Deltagon in its accounts as a subsidiary.

The acquisition is expected to close during the first half of 2021, subject to regulatory approvals and fulfillment of customary closing conditions.

Acquisition price and structure

The total acquisition price is approximately EUR 15.4 million. The cash flow impact of the acquisition price to SSH is EUR 10 million over the next four years.

The parties have also agreed on an earnout payment of no more than EUR 1.3 million, subject to certain conditions being fulfilled in the three year period after the acquisition.

About Deltagon

Deltagon Oy develops and sells secure messaging and transaction solutions to various industries, including finance and the public sector. A majority of Deltagon’s revenue is generated from the secure email messaging solution Sec@GW which is certified by the National Cyber Security Authority at the Finnish Transport and Communications Agency (NCSA-FI) for protecting classified information according to Finnish national (FI) ST III and ST IV security requirements.

The revenue of Deltagon Oy is estimated to be approximately EUR 4.7 million in 2020. Operating profit adjusted for calculatory intra-group service charges is estimated to be approximately EUR 2.5 million. The company has no debt apart from customary accounts payable and deferred liabilities items.

Deltagon’s business is primarily subscription-based, creating stable free cashflow. Because of the relatively small capitalization base, the free cashflow correlates closely with operating profit.