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Is the Twilio-Segment deal expensive? – TechCrunch

A fast have a look at the deal’s historic analogs and what we are able to inform from the numbers

The Twilio-Segment acquisition was the most important story of the weekend, and in our present IPO lull, it’s the most-discussed deal of the second.

So it hasn’t been a shock to see people working to determine if the $3.2 billion price ticket Twilio expects to pay for Section is reasonable, affordable or costly.

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We had the identical query.

The all-stock transaction is one other massive deal from Twilio, which previously scooped up SendGrid. Some anticipated Twilio to be picked up by a bigger firm after it went public, I’ve been informed. As a substitute, Twilio has change into the buying entity, boosting its dimension and including to its complete addressable market (TAM) by means of dealmaking.

exchange banner sq bluHowever a sensible firm can nonetheless overpay whereas executing a usually clever technique. So, does the Section deal look low cost, or costly? Whereas we don’t have all the information we’d like, a couple of helpful VCs dropped hints concerning the dimension of Segment in my DMs.

Our hunt begins with Twilio’s own release on the matter. From there, we’ll usher in some historic knowledge from the deal that Twilio compares the Section transaction to, evaluate the ensuing multiples to as we speak’s market norms and shut with a dialogue of the buying firm’s rising share worth. The synthesis of all the weather will give us a solution. And we’ll have some enjoyable on the identical time.

The deal

A fast refresher on the deal: Twilio will spend $3.2 billion in shares of itself to buy Section. Per the corporate, the transaction is price about 6% of the mixed entity.

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Alex Wilhelm