{"id":18494,"date":"2020-05-06T01:05:37","date_gmt":"2020-05-06T01:05:37","guid":{"rendered":"https:\/\/rbsitsoftwaresolution.com\/blog\/sinch-acquires-saps-digital-interconnect-messaging-business-for-250m.html"},"modified":"2020-05-06T01:05:37","modified_gmt":"2020-05-06T01:05:37","slug":"sinch-acquires-saps-digital-interconnect-messaging-business-for-250m","status":"publish","type":"post","link":"https:\/\/www.rbsitsoftwaresolution.in\/blog\/sinch-acquires-saps-digital-interconnect-messaging-business-for-250m.html","title":{"rendered":"Sinch acquires SAP\u2019s Digital Interconnect messaging business for $250M"},"content":{"rendered":"

MA activity has generally slowed down<\/a> in the weeks since the novel coronavirus took a grip on the world, but there have been some pockets of activity in the tech industry when the price is right or when the divestment\/acquisition just makes sense.<\/p>\n

The world of messaging brings us the latest development in that theme:\u00a0SAP<\/a>, the CRM and enterprise software giant, is selling<\/a> its Digital Interconnect messaging business to Sinch<\/a>, a Swedish cloud voice, video and messaging company.<\/p>\n

Sinch <\/a> said it is paying \u20ac225 million (around $250 million) on a cash and debt-free basis for the business, which has 1,500 enterprise customers that use it for various messaging services, such as the now-popular option of running \u201comnichannel\u201d conversations with\u00a0customers over SMS, push, email, WhatsApp, WeChat and Viber; and messaging technology for carriers.<\/span><\/p>\n

The deal will give Sinch, based in Sweden, a foothold in the US market \u2014 the Digital Interconnect business is headquartered in Silicon Valley \u2014 and access to a trove of customers using the kind of messaging technology that Sinch develops and sells.<\/p>\n

The significance here is that messaging continues to be a very popular and high-volume, but low-margin (or even no-margin in some cases), business. So it makes sense for Sinch to pursue a bigger strategy for more economy of scale, a trend that I think will continue to play out. As a case in point: Sinch has been on an acquisition spree in the last month, and other deals have included Latin American messaging provider Wavy ($119 million, announced March 26<\/a>), and ChatLayer ($6 million, announced April 20<\/a>).<\/p>\n

\u201cWith SAP <\/a> Digital Interconnect now becoming a part of Sinch<\/span>, we build on our scale, focus and capabilities to truly redefine how businesses engage with their customers, throughout the world,\u201d comments Oscar Werner, Sinch<\/span> CEO, in a statement. \u201cThe transaction strengthens our direct connectivity globally. Plus, it enables us to expand and accelerate a range of business-critical services to mobile operators, including products for person-to-person messaging, reporting and analytics.\u201d<\/p>\n

The news caps off nearly a month of speculation<\/a> that SAP was gearing up for a sale of the legacy unit as part of a bigger strategy to focus more squarely on its CRM and newer enterprise IT services. It comes amid a particularly challenging economic environment, and that\u2019s before considering all the IT, security and other challenges companies were facing<\/a> even before COVID-19. SAP also has other fish to fry. It\u00a0acquired Qualtrics in November 2018<\/a> for $8 billion, spearheading a stronger move into employee and customer experience, surveys and research; and other SAP exits this year have included shuttering travel business Hipmunk<\/a>, which was part of Concur (another acquisition made by SAP), back in January.<\/p>\n

Between then and now SAP has also seen a very notable personnel change. Its co-CEO Jennifer Morgan\u00a0stepped away from the company<\/a> by mutual agreement with the board, leaving Christian Klein as sole CEO (the two had been in the co-CEO roles for only six months). At the time, the company said that the abrupt change \u2014 a mere 10 days between late-Friday announcement and departure \u2014 was in response to \u201cthe\u00a0current environment [which] requires companies to take swift, determined action which is best supported by a very clear leadership structure.\u201d<\/p>\n

It would appear that this sale is an example of the kind of swift and determined action that the board was hoping to see.<\/p>\n

SAP\u2019s messaging unit has been around in one form or another for years. It became a part of SAP in 2010 as part of its acquisition of Sybase, but even before that Sybase acquired Mobile 365, which had developed the messaging technology that ultimately became SAP Digital Interconnect, back in 2006.<\/p>\n

At the time, the messaging business was the primary part of Mobile 365, and Sybase paid $417 million<\/a> for that company. In that regard, it might look like SAP is now selling it for a loss, although you could also argue that 15+ year-old technology in the fast-moving world of messaging would have depreciated at this point.<\/p>\n

The business itself is very typical of messaging: huge volumes but not huge revenues.<\/p>\n

In 2019, SAP said that the enterprise messaging business processed 18 billion messages, while its carrier services processed 292 billion carrier messages. The Bloomberg report that broke the news about the intent to sell the division said that it made $50 million in EBITDA and $250 million in revenue last year. But actually this is small relatively speaking: SAP altogether had revenues of nearly $30 billion in the same period. In other words, it\u2019s an okay business but not really core to SAP and where it\u2019s going.\u00a0<\/span><\/p>\n

On the other hand, it\u2019s a better fit for Sinch. The company originally spun out<\/a> from low-cost IP calling company Rebtel, was then acquired<\/a> by publicly-traded CLX, which subsequently rebranded as Sinch. It is a much smaller company than SAP \u2014 market cap of about $3.1 billion (30.82 billion Swedish krona), versus SAP\u2019s market cap of $139 billion \u2014 but is squarely focused on messaging services similar to those that the former SAP division offers.<\/p>\n

\u201cSAP\u00a0Digital\u00a0Interconnect\u00a0is a leader in its area showing profitable growth and reaching 99 percent of the world\u2019s mobile subscribers.\u00a0Looking at\u00a0Sinch<\/span>\u2019s\u00a0innovation and investment strategy\u00a0in the area of\u00a0cloud\u00a0communication platforms,\u00a0we welcome\u00a0them\u00a0as the new owner\u00a0of\u00a0SDI. Sinch<\/span>\u00a0is perfectly positioned to\u00a0unleash further\u00a0growth\u00a0potential\u00a0we\u00a0see\u00a0in\u00a0SDI,\u201d said Thomas Saueressig, member of the Executive Board of SAP SE, responsible for SAP Product Engineering, in a statement.<\/p>\n

MA continues on in the wider European region even while so much else has slowed down or stopped in the current market. This deal follows on the heels of Intel acquiring Israel\u2019s Moovit<\/a> for $900 million this week, and Avira in Germany getting acquired by Investcorp<\/a> at a $180 million valuation several weeks ago.<\/p>\n

Article source: http:\/\/feedproxy.google.com\/~r\/techcrunchIt\/~3\/3N-f_GWyHeM\/<\/p>","protected":false},"excerpt":{"rendered":"

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