By Oishee Chakrabarti, AJ Tomas, Sidd Jain (University of Chicago) & Sally Marshall, Max Raso, Izer Onadim, Valeriya Shreyber (Imperial College London)
Overview of the deal
Implied Equity Value: $3.2 billion
Total Transaction Size: $3.2 billion
Closed date: October 12, 2020
Target advisor: Q4 2020
With an aim “to build the customer engagement platform of the future,” Twilio announced the acquisition of the customer data platform Segment on October 12th. Twilio will acquire Segment for approximately $3.2 billion in Twilio Class A stock (which allows for a fully diluted and cash-free/debt-free transaction), thereby making Segment a division of Twilio. The transaction will allow for an acceleration of Twilio’s growth with a combined total market value of $79 billion, bringing the communications company closer to its vision of becoming the leading customer engagement platform trusted by developers and companies around the world. Twilio’s acquisition of Segment promises to not only enable businesses to understand customer data and tear down data silos that hinder customer satisfaction but to also allow for a better platform for engagement through effective communication. This transaction is expected to close in the fourth quarter of Twilio’s fiscal year 2020, subject to satisfactory closing conditions, with financial advising from Morgan Stanley & Company LLC.
“The one thing that’s always been missing from Twilio as we’ve been building up this customer engagement platform is understanding of the end users themselves. We power the communications, but we don’t actually know who the customers are.” - Jeff Lawson, Co-Founder & CEO of Twilio
Company Details: Acquirer – Twilio
Twilio is a cloud communications platform that enables developers and innovators to build and operate communications within software applications across the globe. The communications company enables innovators, across industries, to engage with their customers in revolutionary ways. Twilio has virtualized the world’s communication infrastructure through APIs that are developer-friendly yet robust enough to power the most demanding applications.
Founded: March 13, 2008
Headquarters: San Francisco, CA
CEO: Jeff Lawson
Number of Employees: 4,500 (as of 2020)
Market Cap: $48.38 billion (as of 10/19/20)
EV: $47.17 billion
LTM Revenue: $1.39 billion
LTM EBITDA: - $260.42 million
LTM EV/Revenue: 33.89x
Company Details: Target - Segment
Segment is a leading customer data platform that allows for access to reliable data and offers a toolkit for standardized data collection, unifies user records, and links customer data into any system. Segment is used by more than 20,000 companies including Intuit and FOX to accelerate growth and offer extraordinary user experiences.