Sinch Acquires Pathwire (Mailgun & Mailjet) for $1.9B

Sinch Expands Communications Platform with Pathwire Acquisition

Sinch, a Swedish company operating in the messaging and communications API space, is strategically growing its platform through a significant merger and acquisition. A definitive agreement has been reached to acquire Pathwire, the cloud-based email provider responsible for Mailgun, Mailjet, and Email on Acid.

Deal Details and Enterprise Value

The acquisition will be funded with $925 million in cash, supplemented by the issuance of 51 million new Sinch shares. Considering yesterday’s closing price on the Nasdaq Stockholm (where Sinch is traded with a $13.7 billion market capitalization), the total enterprise value of the transaction is estimated at $1.9 billion (SEK 16.6 billion).

Competitive Positioning Against Twilio

This substantial deal further solidifies Sinch’s position as a key competitor to Twilio in the communications API market. Notably, Twilio previously acquired Sendgrid, another prominent email API provider favored by developers, in 2018 for $2 billion in an all-stock transaction.

The Significance of Email in Modern Communications

The acquisition highlights the crucial role email continues to play in the broader communications landscape. Many everyday services, such as booking confirmations, receipts, and password resets, rely on these often-unseen email infrastructure providers. According to data from Technavio, the global email delivery market is valued at $16 billion annually.

Transactional Email Dominates the Market

Within this $16 billion market, transactional email – the specific area of expertise for Pathwire – represents a significant majority, accounting for over 60% of the total value. This underscores the demand for reliable and scalable email delivery solutions.

Industry Consolidation and Thoma Bravo’s Investment

This acquisition is indicative of the ongoing consolidation within the communications sector. Pathwire itself is a product of consolidation, having been previously owned by Thoma Bravo and actively acquiring businesses in the email-as-a-service space, most recently Email on Acid in June of this year.

The deal structure, with approximately half of the consideration in shares, results in Thoma Bravo becoming an investor in Sinch, joining existing shareholders like SoftBank and Temasek.

Pathwire’s Extensive Customer Base

This represents Sinch’s largest acquisition to date, bringing with it a substantial business serving a wide range of customers. Pathwire currently supports over 100,000 businesses, reaching millions of end-users through its Mailjet, Mailgun, and other associated products.

Notable clients of Pathwire include Lyft, Kajabi, Microsoft, Iterable and DHL.

The platform facilitates the development of email experiences for applications, marketing initiatives, and various communication services.