MessageMedia purchased by Sinch in a US$1.3b cash and stock deal

Image Credit: Cytonn Photography on Unsplash

Melbourne-based Messaging services provider MessageMedia has been acquired by Swedish giant Sinch AB in another instance of a billion-dollar buyout of an Australian tech company. Sinch will pay US$1.3 billion through a combination of cash, equity and debt facilities. 

The deal comes a week after another Melbourne-based startup, A Cloud Guru, was purchased by Pluralsight.

Founded in the year 2000, MessageMedia is a software-as-a-service (SaaS) provider that offers small and medium-sized businesses a two-way messaging platform without the need for coding.

The company operates in the United States, Australia, New Zealand and Europe and claims to serve over 65,000 customers as of December 2020.

Commenting on the acquisition, Paul Perrett, CEO of MessageMedia, said: “Mobile messaging delivers tremendous ROI, but smaller businesses often lack tools that cater to their specific needs.”

“Serving these customers presents a tremendous opportunity, and with Sinch, we can build a global leader in our field.”

MessageMedia acquired the US-based messaging platform SimpleTexting in November last year. For the year ending June 30 2021, it expects to record revenue of US$151 million with a gross profit of US$94 million, and an adjusted EBITDA of US$51 million.

Winning the M&A Race

Cloud communications platform, Sinch is publicly listed in Sweden and has been profitable since 2008. It has a local presence in more than 40 countries. In May, the company raised US$1.1 billion from Temasek and SoftBank.

The deal is significant for Sinch amidst tough competition within the business messaging segment. In February this year, Sinch announced the acquisition of Inteliquent for $1.14 billion. In April, Netherlands-based MessageBird bought SparkPost for US$600 million. Then in May, Sinch’s US-based competitor Twilio announced the purchase of ZipWhip, a toll-free messaging service provider, for $850 million.

Sinch’s chief executive Oscar Werner expects that the acquisition will help them expand their consumer base.

“Addressing small and medium-sized businesses opens up a new avenue to growth and dramatically expands our addressable market,” he said.

“With MessageMedia as a part of Sinch, we will have the best team in the industry to capitalize on that opportunity.”

“Sinch has made several successful acquisitions that have increased profitability, strengthened product offering, and broadened our customer base.”

“We see continued opportunities to make further value-accretive acquisitions also in the future. Our revised leverage policy makes us better placed to execute on our M&A strategy.”

The transactions include one-off integration costs of up to US$8 million over 18 months. Sinch will pay investors, including Australia-based Mercury Capital, US$1.1 billion upon closing.

J.P. Morgan is acting as a financial advisor, and Herbert Smith Freehills is a legal advisor to MessageMedia. The transaction is expected to close in the second half of 2021.

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By Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.