Twilio to Acquire SendGrid in an All-Stock Deal Worth Around $2 Billion


Cloud software company Twilio Inc has announced plans to acquire email API platform SendGrid Inc in an all-stock deal valued at approximately $2 billion.

Under the terms of the agreement, SendGrid shareholders will receive 0.485 shares in Twilio for each share held. According to the companies, the ratio represents a premium of 19% to the $36.92 closing price of SendGrid stock on Monday.

This is the largest acquisition that Twilio has made to date and is expected to generate over 700 million in annual revenue. The companies expect to close the transaction in the first half of fiscal 2019, creating a platform of choice for developers and more than 100,000 customers.

However, it is still subject to customary closing conditions, including the approval of SendGrid and Twilio shareholders. The boards of both companies have already approved the deal. Morgan Stanley is the financial adviser to SendGrid, while Goldman Sachs is Twilio’s financial adviser.

“Increasingly, our customers are asking us to solve all of their strategic communications challenges – regardless of channel. Email is a vital communications channel for companies around the world, and so it was important to us to include this capability in our platform,” said Jeff Lawson, Twilio co-founder and chief executive officer. “The two companies share the same vision, the same model, and the same values. We believe this is a once-in-a-lifetime opportunity to bring together the two leading developer-focused communications platforms to create the unquestioned platform of choice for all companies looking to transform their customer engagement.”

Twilio, a San Francisco, California-based firm, uses its technology to assist customers such as Lyft and Airbnb to send messages to their users, while SendGrid focuses on automated email services.

“This is a tremendous day for all SendGrid customers, employees and shareholders,” said Sameer Dholakia, Send Grid chief executive officer. “Our two companies have always shared a common goal – to create powerful communications experiences for businesses by enabling developers to easily embed communications into the software they are building. Our mission is to help our customers deliver communications that drive engagement and growth, and this combination will allow us to accelerate that mission for our customers.”

Adding the SendGrid’s email API platform to Twilio’s cloud communications platform is expected to steer the resulting company into remarkable growth. The combined firm is also expected to offer developers a single superb platform that will take care of all their key communication channels (including email, messaging, voice, and video).

Both companies are growing rapidly and currently drive over half a trillion customer interactions annually. Shares of Twilio lost more than 3.5% in premarket session Tuesday after ending Monday’s regular trading session with a gain of 1.5%.

The drop might reflect arbitrage investing activity that frequently accompanies deals in which an acquirer funds its purchase with stock. Twilio stock has gained more than threefold since the beginning of the year.

SendGrid shares ended Monday’s regular session 0.2% lower but jumped $4.17, or 13.48% to 35.10 in premarket trading on Tuesday. The stock has outperformed the market with a 29% gain year-to-date.