Sinch, a Swedish company that competes against Twilio in the messaging APIs market, is making another major M&A deal to expand its platform. It has reached a definitive agreement to buy Pathwire, the cloud-based mail provider behind Mailgun and Mailjet, as well as Email on Acid. Sinch stated it would pay $925m in cash and 51 million shares of Sinch. Sinch's closing price yesterday (it is traded on the Swedish Stock Exchange Nasdaq Stockhom, and has a market capital of $13.7 billion), gives it an enterprise value of $1.9billion (SEK 16.6billion).
This deal is significant in its own right but it also keeps Sinch as a key competitor to Twilio. American-based communications API company Sendgrid, another major email API provider, was acquired by Sinch for $2 billion in 2018. It was an all stock deal.
This also shows how important email is in the communications landscape. Services you may not even think twice about, but use every day booking confirmations, receipts, and password resets fall under this umbrella. Technavio estimates that the global delivery market for email is $16 billion per year. This includes all payments for email services and related investments. However, only transactional email (which Pathwire covers) accounts to 60% of this figure.
This also highlights the huge consolidation taking place in this sector at the moment. Pathwire is an example. It was previously owned by Thoma Bravo, who was also an acquirer of large businesses in the same general category as email-as a service. The latest acquisition was Email on Acid, which was announced in June this year. Was that what prompted Sinch to buy Pathwire? Thoma Bravo, along with others like SoftBank or Temasek, became investors in Sinch because about half of the deal was made in shares.
This is Sinch's largest acquisition, and it's also a large business. Pathwire, as a whole, has become a huge platform for building email experiences in apps, marketing campaigns, and other communication services. It has more than 100,000 customers today, which translates into millions of people who use Mailjet, Mailgun, and other Pathwire products, as well as analytics and all the other benefits that come with it. Lyft and Kajabi are among the customers.
