Twilio made its largest acquisition to date with a $3.2 billion, all-stock deal to buy Segment. The deal, which was approved by both companies' boards, is slated to close in the fourth quarter of this year.
San Francisco-based Segment helps companies manage the streams of data they collect about their customers from various platforms. It was valued at $1.5 billion in its last private funding round, with investors including Accel and Alphabet Inc.’s GV.
“Together, Twilio and Segment have an incredible opportunity to build the customer engagement platform of the future,” said Peter Reinhardt, Segment’s co-founder and CEO, in a statement. “We created Segment to help businesses set themselves apart in the digital age and deliver rich, connected customer experiences built on high-quality data. By joining forces and applying our customer data platform to Twilio’s engagement cloud, we’ll be able to make the entire customer experience seamless from end-to-end.”
The deal moves Twilio deeper into customer engagement services, both for marketing data and other purposes, in order to better compete against companies such as Adobe and Salesforce. Once the deal closes, Twilio will be able to deliver a single, unified view that helps companies better understand their customers in order to engage with them more effectively.
Segment, which was founded in 2011, is one of the leading companies for a new type of software called customer data platform (CDP). Its customers include IBM, Glossier, and Intuit.
“Data silos destroy great customer experiences,” said Jeff Lawson, co-founder and CEO of Twilio, in a statement. “Segment lets developers and companies break down those silos and build a complete picture of their customer. Combined with Twilio's Customer Engagement Platform, we can create more personalized, timely and impactful engagement across customer service, marketing, analytics, product and sales. We are thrilled to welcome Segment to the Twilio team.”
The transaction will accelerate Twilio’s growth to a combined total addressable market of $79 billion. Twilio is using $3.2 billion of its Class A common stock to fund the deal.
The deal for Segment was Twilio's eighth acquisition since it was founded in 2008, and its seventh acquisition since it went public in June 2016. It's the largest Twilio's largest acquisition to date, surpassing its $2 billion acquisition of SendGrid in two years ago.
The deal for Segment started percolating on Friday before it was officially announced on Monday. After the news was announced, Twilio's shares have increased by more than 6% and it briefly reached an all-time high of $328 per share.
RELATED: Raynovich: Why the COVID-19 cloud bump is here to stay
Cloud companies have seen a surge in use this year due to the Covid-19 as businesses sent millions of employees home to work and schools went to online learning.