• by Ray Schultz , October 16, 2018

SendGrid, an email service provider that went public only last year, will be acquired by Twilio Inc. in an all-stock transaction valued at roughly $2 billion, Twilio announced on Monday. The boards of both companies have approved the merger.

The purchase -- which is expected to close in the first half of 2019, subject to shareholder approval -- is valued at roughly $36.92 per share based on Monday’s closing prices.

The exchange ratio represents a 14% premium over the average exchange ratio for the ten-day period ending on Monday, Twilio says.

Twilio’s stock price fell by 4.1% following reports of the merger. Both companies will report their financials on November 6.

Twilio expects that adding SendGrid’s email API platform to its cloud communications platform will provide value to the clients of both firms. The two firms have over 100,000 customers between them.

“Increasingly, our customers are asking us to solve all of their strategic communications challenges -- regardless of channel. Email is a vital communications channel for companies around the world, and so it was important to us to include this capability in our platform," states Jeff Lawson, Twilio's co-founder and chief executive officer.

When filing its IPO late last year, SendGrid said it hoped to raise $112 million on a stock price ranging from $13.50 to $15.60.

According to its October 2017 filing with the Securities and Exchange Commission, SendGrid provides three basic services: Email API, introduced in 2009; Marketing Campaigns, launched in 2015; and Expert Services, fielded in 2016.

The majority of its revenue growth has been derived from the Email API service, which “allows developers to use our API in their preferred development framework to leverage our platform to add email functionality to their applications within minutes,” the filing states.

The Denver Post observed last year that SendGrid is “one of the rare Colorado tech companies to make it to the initial public offering stage in years.”