Appgate to Be Valued at $1 Billion in Newtown Lane Merger

(Bloomberg) -- Cybersecurity provider Appgate has agreed to merge with Newtown Lane Marketing Inc., a publicly traded shell company, according to people with knowledge of the matter.

Appgate’s existing investors led by private equity firms BC Partners and Medina Capital are set to own about 74% of the combined company, said the people, who requested anonymity because the information is private. Magnetar Capital has committed to invest as much as $100 million in convertible notes, valuing the combined entity at $1 billion, and a deal could be announced as soon as Tuesday.

Representatives for Miami-based Appgate and Newtown Lane Marketing declined to comment. Magnetar declined to comment.

Appgate, built on a so-called zero-trust foundation and spun out of Cyxtera Technologies, has customers including the U.S. departments of Defense and Homeland Security, as well as Fifth Third Bancorp, Norwegian Cruise Line Holdings Ltd. and Secureworks Corp. It’s projected to deliver $40 million in revenue in 2021, and to post a 50% compound annual growth rate through 2025, said the people.

Newtown Lane Marketing counts Jonathan Ledecky, a co-owner of the National Hockey League’s New York Islanders, as its president and controlling shareholder. Unlike a special purpose acquisition company, a merger with a shell company presents the ability to avoid warrant dilution and can provide increased certainty of closing. Still, Ledecky also has a hand in SPACs, and his recent vehicles struck deals with XL Fleet Corp. and Bark, known for its subscription BarkBox service.

Once the merger is consummated, Appgate will apply to list on the Nasdaq Stock Market or the New York Stock Exchange, and directors are expected to include Ledecky, Medina Capital’s Manny Medina and BC Partners’ Raymond Svider and Fahim Ahmed, the people said.

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