After the Swedish cloud communications company Sinch raised $ 690 million from SoftBank for acquisitions in December, it implemented its strategy in this department. Today the company announced that it is acquiring Inteliquent, a US voice communications connectivity provider currently owned by private equity firm GTCR, for $ 1.14 billion in cash.
To fund the deal, Sinch, along with others, has raised SEK 8.2 billion (US $ 986 million) in funding from Handelsbanken and Danske Bank.
The deal will give Sinch – a competitor to Twilio, a significant hold in the U.S. marketplace with a suite of messaging, calling, and marketing (engagement) APIs for those looking to incorporate communications into their services in mobile apps and other services procure.
Inteliquent – a profitable company with 500 employees and sales of $ 533 million, gross income of $ 256 million and Ebitda of $ 135 million in 2020 – claims to be one of the largest language providers in North America, who serves other service providers as well as companies. The network is connected to all major telecommunications companies that cover 94% of the US population. Over 300 billion minutes of voice calls and 100 million phone numbers are handled annually for customers.
Sinch is publicly traded in Sweden – market capitalization is currently at $ 13 billion (just over 108 billion Swedish crowns) – and the acquisition begs the question of whether the company plans a stronger financial presence in the US, for example, a listing there . We asked the company about the next steps and will update this post as soon as we learn more.
“Taking a leadership position in the US language market is key to establishing Sinch as the world’s leading cloud communications platform,” said Oscar Werner, CEO of Sinch, in a statement. “Inteliquent serves the largest and most demanding voice customers in America with the highest quality, supported by a 100% network across the United States. Our shared strengths in voice and messaging provide a unique position to grow our business and deliver a superior customer experience to our customers. “
Inteliquen offers two main service areas: Communications-Platform-as-Service (CPaaS) for API-based services to provide voice calls and telephone numbers. and other legacy Infrastructure-as-a-Service (IaaS) products for telecommunications companies such as off-net call termination (when a call is routed from one operator to another) and toll-free numbers. These each account for about half of the total business, although – not surprisingly – the CPaaS business is growing twice as fast as IaaS.
Like many other companies that focus on services for people who rely more on communication services because they see each other less face to face, the company has seen an increase in usage over the past year. (Without Covid Lift, adjusted earnings would have been $ 499 million, so still healthy.)
Since Sinch was spun off from Rebtel in 2014 to provide communication tools to developers, the company has taken on an acquisition role to expand its geographic reach and the services it offers these customers.
Deals most recently included the purchase of ACL in India for $ 70 million and SAP’s digital connections business for $ 250 million. The deals – combined with Twilio’s own acquisitions of companies like Sendgrid for $ 2 billion and last year’s segment for $ 3.2 billion – speak for the larger consolidation trend in digital (API-based) communications as well as for the enormous value contained therein.
Inteliquent itself had previously been in private equity hands and was controlled by Chicago-based GTCR like Inteliquent itself. According to PitchBook, the most recent funding was a mezzanine loan from Oaktree Capital in 2018 for just under $ 19 million.
Interestingly, Inteliquent was itself an investor in innovative communications startups and participated in a Series B for Zipwhip, a startup that is developing better ways to integrate mobile messaging tools with wireline services.
“We are pleased about the enormous possibilities that this combination opens up and expands the services that we can offer our customers. By combining our leading language offering with Sinch’s global messaging capabilities, we are truly a leader in the rapidly evolving cloud communications market, ”said Ed O’Hara, CEO of Inteliquent, in a statement.