Sinch acquires Pathwire, the company behind Mailgun and Mailjet, for $1.9B to add email into its API-based communications platform

Sinch is a Swedish company that competes against Twilio in the messaging APIs market. It has made another major M&A deal to expand its platform. It has agreed to purchase Pathwire the cloud-based email provider behind Mailgun and Mailjet, as well as Email on Acid. Sinch stated that it would pay $925m in cash and 51 million shares of Sinch. Sinch's closing price yesterday (it is traded on the Swedish Stock Exchange Nasdaq Stockhom, and has a market capital of $13.7 billion), works out to an enterprise worth $1.9 billion (SEK 16.6 trillion).

Sinch continues to be a key competitor to Twilio, despite the fact that this deal is quite large. U.S.-based communication API giant Sendgrid, another popular email API provider, was acquired by Sinch for 2 billion in 2018. This was an all stock deal.

This also shows how important email is in the communications landscape. Services you might not think twice about, but use every day -- booking confirmations. receipts. password resets -- all fall under this umbrella. Technavio estimates that the global delivery market for email is $16 billion per year. This includes all payments for email services and related investments. Pathwire specifically covers 60% of this figure.

This also highlights the huge consolidation taking place in this sector at the moment. Pathwire is an example of this. It was previously owned by Thoma Bravo, who was also an acquirer of large businesses in the same general category as email-as a service. The latest acquisition was Email on Acid, which was announced June this year. Was that what prompted Sinch to buy Pathwire? Thoma Bravo, along with others like SoftBank, Temasek, became investors in Sinch because about half of the deal was in shares.

This is Sinch’s largest acquisition to date and it's also an enormous business. Pathwire, as a whole, has become a huge platform for building email experiences in apps, marketing campaigns, and other communication services. It has more than 100,000 customers today, which translates into millions of people who use Mailjet, Mailgun, and other Pathwire products, as well as analytics and all the other benefits that come with it. Lyft and Kajabi are among the customers.

Oscar Werner, CEO of Sinch, stated that each form of digital communication has its own benefits. Delivering high quality at scale requires both technical expertise and subject matter expertise. We will be able, together with Pathwire to offer a best of breed product set across messaging, voice, and email that empowers developers and businesses to create an unrivaled digital customer experience.

Sinch also gains a stronger foothold in the U.S., where it made other acquisitions such as purchasing Inteliquent earlier this year for $1.14 million. (Pathwire is located in San Antonio, Texas.

Sinch also has other services on the platform, but Pathwire is the larger concept it is trying to pursue with its acquisition of Pathwire.

It's difficult to build messaging, voice services, email, or other communication tools from scratch. For many companies that depend on them in their apps and websites and other customer interactions it's not an essential core service. Therefore, putting resources into them would be expensive, distracting, time-consuming, and costly. APIs allow developers and others to integrate communication services powered by other parties into their various experiences. This same API concept can also be applied to other areas of tech, such as financial services or payments.

Pathwire's products are diverse, but that is why it is a compelling purchase for Sinch. Mailgun is the company's big API player in cloud-based communications. Mailjet offers a bit more flexibility for those with less technical skills, as they can use drag-and drop functionality to integrate their email APIs. Email on Acid, another low-code option, offers additional features that allow users to maintain consistency across various delivery platforms.

"Sinch is a great fit for Pathwire: both companies are focused on product excellence, customer satisfaction, and clear, quantifiable outcomes. "I'm proud of the Pathwire team's achievements, and I'm extremely excited about the next step in our journey and all the opportunities we can unlock together," stated Will Conway (Pathwire CEO).

"We are proud to have worked with Will and the Pathwire Team over the past few year, investing in product initiatives and leadership, as well as M&A including the acquisitions Mailjet and Email on Acid," said Hudson Smith, a Partner at Thoma Brava. "Sinch is the ideal strategic partner to support Pathwire, and continue to build upon its market-leading position in email communications as the preferred partner for marketers and developers."

Not surprisingly, Pathwire was already profitable. The projected revenues for the year ending December are $132 millions, with a gross profit of $104 million and an adjusted EBITDA (of $55 million) in that same period.