Sinch — the Swedish company that provides a suite of services for companies to build communications and specifically “customer engagement” into their services by way of APIs — has made yet another acquisition in its global march to scale up its business and compete more squarely with Twilio. The company today announced that it has acquired MessageMedia, a provider of SMS and other messaging services for businesses to manage customer relations, user authentication, alerts, and more.
The acquisition is being made for $1.3 billion — comprised of $1.1 billion in cash and the rest in shares (or in Sweden’s currency, SEK10,745 in total based on Sinch’s share price and yesterdays exchange rate). The deal is expected to close in the second half of this year.
The deal is notable for giving Sinch a significant inroad into the world of business SMS and because of the timing. Less than a month ago, Sinch’s big rival Twilio announced that it would acquire ZipWhip, another big player in the same area of business SMS, for $850 million.
MessageMedia, based out of Melbourne, Australia, is currently operational also in New Zealand, the U.S., and Europe, where it focuses on providing services primarily to the SMB market with a self-service platform where customers can build and operate services, with the option of using a web portal provided by MessageMedia to handle the traffic.
It has some 60,000 customers and handles 5 billion+ messages annually, Sinch said. Growth is robust in the U.S. market, where MessageMedia is adding 1,500 new customers each month. Alongside SMS, it also provides the tech for companies to build MMS experiences and mobile landing pages. It also provides them with tools to integrate other features and an API gateway.
For Sinch — which is publicly traded in Sweden and currently has a market cap of $13.6 billion — the deal comes just weeks after the company announced that it would be raising $1.1 billion for more acquisitions, with a big chunk of the money coming from Softbank, one of its principal backers.
Given the size of this deal announced today, now we know which deal Sinch had in mind. It would be interesting to know whether Sinch’s move to buy MessageMedia predated Twilio’s for ZipWhip, which definitely does not feel like a coincidence. “Addressing small and medium-sized businesses opens up a new avenue to growth and dramatically expands our addressable market. With MessageMedia as a part of Sinch, we will have the best team in the industry to capitalize on that opportunity,” said Oscar Werner, Sinch CEO, in a statement.
Since has been on a fast pace of buying up companies in recent times to scale up its existing business, tapping not just into the massive surge of people using phones and the internet to communicate in these pandemic-stricken times, but also to bulk up and have more economies of scale in the communications industry, essentially a business built on aggregating incremental revenues.