Sinch buys MessageMedia for $ 1.3 billion to compete with Twilio in enterprise SMS services – TechCrunch

Sinch – the Swedish company which provides a suite of services to businesses to integrate communications and in particular “customer engagement” into their services by means of APIs – has made another acquisition in its global market to grow its business and compete more directly Twilio. The company announced today that it has acquired Message, a provider of SMS and other messaging services for companies to manage customer relations, user authentication, alerts, etc.

The acquisition is completed for $ 1.3 billion, of which $ 1.1 billion is in cash and the remainder in shares (or in Swedish currency, SEK 10,745 in total based on Sinch’s share price and yesterday’s exchange rate). The deal is expected to be finalized in the second half of this year.

The deal is remarkable not only for giving Sinch a major breakthrough in the corporate SMS world, but also for the timing. Sinch’s great rival less than a month ago Twilio announced the acquisition of ZipWhip, another big player in the same business SMS arena, for $ 850 million.

MessageMedia, based in Melbourne, Australia, is currently operational also in New Zealand, the United States and Europe, and focuses on providing services primarily to the SME market with a self-service platform where Customers can create and operate services, with the option of using a web portal provided by MessageMedia to manage traffic.

It has some 60,000 customers and handles more than 5 billion messages a year, Sinch said. Growth is particularly strong in the US market, where MessageMedia adds 1,500 new customers each month. Along with SMS, it also provides businesses with technology to create MMS experiences and mobile landing pages, and it also provides them with tools to integrate other functionality as well as API gateway.

Sinch himself says he manages some 150 billion mobile customer engagements for his clients each year and has 8 of the top 10 tech companies as clients.

Sinch is listed on the Swedish stock exchange and currently has a market cap of $ 13.6 billion, and the deal comes just weeks after the company said it would raise $ 1.1 billion for other acquisitions, with much of the money coming from Softbank, one of its major backers. funds.

Given the scale of this deal announced today, we now know which deal Sinch had in mind. It would be interesting to know if Sinch’s decision to buy MessageMedia preceded Twilio’s for ZipWhip, which certainly doesn’t sound like a coincidence.

“Sinch drives mobile customer engagement for some of the world’s leading brands and technology platforms. With the acquisition of MessageMedia, Sinch will now be able to bring the benefits of enhanced mobile customer engagement to every small business on the planet, ”CEO Oscar Werner told TechCrunch. “You will no longer need the deep pockets of a company or the technical skills of an engineer to deliver first-class customer experiences. “

Sinch has been rapidly buying out companies in recent times to expand its existing business, not only harnessing the huge wave of people using phones and the internet to communicate in these times of pandemic, but also to grow stronger and have more savings. scale in the communications industry, essentially a business based on the aggregation of additional income.

This fact led to many consolidations, with Twilio also rapidly buying out small, strategic companies.

In this regard, MessageMedia is a strong buy for Sinch as it generates strong cash flow. MessageMedia is expected to make $ 151 million in profit for the year ending June 30, with gross profit of $ 94 million and EBITDA of $ 51 million, Sinch said. Sinch himself is also profitable.

Sinch’s other deals include Inteliquer for $ 1.14 billion, ACL in India for $ 70 million and SAP’s digital interconnect business for $ 250 million.

For its part, MessageMedia plays a lot in and is a product of the same API economy that has lifted the likes of Twilio, Stripe and many others built on the premise of knitting together very complex services, which customers can then do. use as simple lines of code that they integrate into their own digital operations, whether they are websites, applications or internal systems.

Communications, and especially systems based on messaging APIs, are estimated to have a market of $ 9 billion to $ 13 billion, said Sinch, with the United States accounting for 30%, and the global market is expected to grow between 25 and 30% until 2024. SMEs, which might lack the resources to create such tools from scratch, are a big part of this activity.

“Mobile messaging offers a huge return on investment, but small businesses often lack tools that meet their specific needs,” Paul Perrett, CEO of MessageMedia, said in a statement. “Serving these customers presents a tremendous opportunity, and with Sinch we can build a global leader in our field. “

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