Sinch – the Swedish company that provides a range of business services to build communication and especially “loyalty” through APIs into their services – has made another acquisition on its global march to grow its business and compete more closely with Twilio . The company announced today that it has acquired MessageMedia, a provider of SMS and other messaging services for businesses to manage customer relationships, user authentication, notifications, and more.
The acquisition is for $ 1.3 billion – consisting of $ 1.1 billion in cash and the remainder in shares (or Swedish currency, a total of SEK 10,745, based on Sinch’s share price and yesterday’s exchange rate). The deal is expected to close in the second half of this year.
The deal stands out not only because it gives Sinch a great entry into the world of business SMS, but also because of the timing. Less than a month ago, Sinch’s big rival Twilio announced it would take over ZipWhip, another big player in the same SMS business, for $ 850 million.
MessageMedia, based in Melbourne, Australia, is currently also active in New Zealand, the US and Europe and is focused on providing services primarily to the SMB market with a self-service platform on which customers can build and operate services, with the option of using a web portal provided by MessageMedia to process the data traffic.
It has around 60,000 customers and processes more than 5 billion messages annually, Sinch said. The growth is particularly strong in the US market, where MessageMedia adds 1,500 new customers every month. In addition to SMS, it also offers companies technology for creating MMS experiences and mobile landing pages, as well as tools for integrating other functions and an API gateway.
Sinch himself says that it handles around 150 billion mobile customer contacts annually for its customers and has 8 of the 10 largest technology companies as customers.
Sinch is publicly traded in Sweden and currently has a market capitalization of $ 13.6 billion. The deal comes just weeks after the company announced it would raise $ 1.1 billion for additional acquisitions, with much of the money from Softbank, one of its key backers.
Given the size of this deal announced today, we now know what deal Sinch had in mind. It would be interesting to know if Sinch’s move to buy MessageMedia is older than Twilio’s for ZipWhip, which definitely doesn’t feel like a fluke.
“Sinch supports mobile loyalty for some of the largest brands and technology platforms in the world. With the acquisition of MessageMedia, Sinch can now bring the benefits of improved mobile customer loyalty to every small business in the world, ”CEO Oscar Werner told TechCrunch. “You 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 buying up businesses at a rapid pace lately to grow his existing business, not only taking advantage of the huge surge in people using phones and the internet to communicate during these pandemic-ridden times, but also, to grow and achieve more economies of scale in the communications industry, which is essentially based on the accumulation of incremental revenue.
This fact has led to a strong consolidation, with Twilio also buying up strategic, smaller companies in a short time.
In that regard, MessageMedia is a strong buy for Sinch as it is making strong money. MessageMedia is expected to generate $ 151 million in earnings for the year ended June 30, with gross income of $ 94 million and EBITDA of $ 51 million, Sinch said. Sinch itself is also profitable.
Sinch’s other deals included Inteliquent for $ 1.14 billion, ACL in India for $ 70 million, and SAP’s digital interconnect business for $ 250 million.
MessageMedia, for its part, plays a very big part and is a product of the same API economy that spawned companies like Twilio, Stripe and many others based on the premise of putting together very complex services that customers can then easily use lines of code that they can use integrate them into your own digital processes, be it websites, apps or internal systems.
Communications, and messaging API-based systems in particular, are valued at a market of $ 9-13 billion, Sinch said, with the U.S. accounting for 30% of that and the global market is expected to grow 25-30% by 2024. who may lack the resources to develop such tools from scratch are a large part of this activity.
“Mobile messaging offers tremendous ROI, but smaller businesses often lack tools to meet their specific needs,” said Paul Perrett, CEO of MessageMedia, in a statement. “Serving these customers is a tremendous opportunity, and with Sinch we can build a global leader in our field.”