Twilio may be planning to acquire Segment in a $3.2bn deal

12 Oct 2020322 Views

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The acquisition of Segment could enable Twilio to expand beyond its core communications capabilities.

On Friday (9 October), Forbes reported that US cloud communications business Twilio is planning to acquire customer data infrastructure platform Segment.

Two sources familiar with the matter told Forbes that Twilio, which currently has a market cap of around $44bn, has agreed to acquire Segment in a deal that is believed to be worth $3.2bn and is partially based on Twilio stock.

Segment, which raised $175m in its latest funding round in April 2019, has been open to acquisition offers, according to Forbes. The San Francisco-based company has received investments from Y Combinator, Accel, GV, Kleiner Perkins, Meritech Capital and Thrive Capital. It was founded in 2012 by Calvin French-Owen, Ian Storm Taylor, Ilya Volodarsky and Peter Reinhardt.

Segment’s technology enables companies to collect, unify and connect with more than 200 marketing, analytics and data warehouse tools. The company counts VMware, Instacart, Trivago and IBM among its 20,000 customers and it employees more than 550 people.

Boosting communications tech

Sources also told TechCrunch that the acquisition could be announced today (12 October) and could be valued from $3bn to $4bn.

The potential deal comes four years after Twilio went public. The company, which was founded in 2008, develops communications infrastructure that allows businesses to reach their customers through text messages, voice and video calls.

Twilio acquired email API provider SendGrid last year in a deal worth around $3bn, so the company is not new to acquisitions of this scale. TechCrunch suggested that the acquisition of Segment could support Twilio’s Flex customer service API, which was launched in 2018.

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The publication also reported that a deal could enable the company to expand beyond its core communications capabilities as it could gather customer data through Segment and create customised emails or ads with SendGrid.

Twilio and Segment have both declined to comment on the reports.

An increasingly competitive space

The news that Twilio could potentially be expanding comes amid a pandemic-fuelled boom in the cloud communications sector. MessageBird, which has been described as “Europe’s answer to Twilio”, was valued at $3bn last week following a $200m funding round.

The Dutch company, which has an office in Dublin, sells cloud-based omnichannel communication software that enables businesses to communicate with their customers through a variety of channels, including SMS, as well as voice and messaging platforms such as WhatsApp.

In an interview with CNBC, MessageBird chief executive Robert Vis said that the company is more dominant in Europe, south-east Asia and Latin America, while Twilio is “very US-focused”.

MessageBird claims to have more than 15,000 customers, leaving it well behind Twilio’s 150,000 customers. Among the businesses using MessageBird are Facebook, Uber, SAP and Deliveroo.

A recent report from Juniper Research estimated that the communications-platform-as-a-service market is worth $7bn this year and could rise to $25bn by 2025.

Kelly Earley is a journalist with Siliconrepublic.com

editorial@siliconrepublic.com