A banner for communications software provider Twilio Inc., hangs on the facade of the New York Stock Exchange (NYSE) to celebrate the company’s IPO in New York City, U.S., June 23, 2016. REUTERS/Brendan McDermid
October 15, 2018
(Reuters) – Cloud communications provider Twilio Inc said on Monday it would buy email technology firm SendGrid Inc in an all-stock deal valued at about $2 billion.
Twilio will offer 0.485 share of its stock for each SendGrid Class A common share. The deal is worth about $36.92 per share, a premium of 19.4 percent to SendGrid’s closing price as of Monday close.
The equity value is about $1.71 billion, according to calculations based on Refinitiv data.
SendGrid shares rose 14.5 percent to $35.40 in extended trading, while Twilio fell 4.5 percent to $73.
Twilio’s systems let software developers automatically send text-message notifications or phone calls to customers without having to build out the technological capabilities themselves. Startups such as Airbnb Inc and Lyft Inc use the service to send text message notifications to users, for example.
SendGrid performs a similar function for so-called transactional emails like receipts or invoices, letting developers send them automatically without having to build out a system from scratch. In recent years SendGrid has been offering tools for email marketing campaigns as well. Firms such as Uber Technologies Inc [UBER.UL] and Spotify Technology SA use SendGrid’s services.
“In addition to the technology there’s also the sizable customer base momentum that SendGrid has that makes this combination particularly powerful,” Twilio Chief Executive Jeff Lawson told analysts on a conference call.
The companies expect the deal to close in the first half of 2019.
Byron Deeter of Bessemer Venture Partners, who is on the boards of both companies, recused himself from the deal talks, Lawson told investors on a conference call. Bessemer invested in both firms before they went public and owns about 13.7 percent of SendGrid’s shares.
Jeff Epstein, a Twilio board member who is a partner at Bessemer, also recused himself, Lawson added.
“This decision was made between the two companies, without any involvement from anyone at Bessemer,” Lawson said.
Goldman Sachs is the financial adviser to Twilio, while Morgan Stanley is SendGrid’s financial adviser.
(Reporting by Arjun Panchadar in Bengaluru and Stephen Nellis and Jane Lanhee Lee in San Francisco; Editing Matthew Lewis and Richard Chang)