The news came out last week that Upland Software Inc., a U.S. firm listed on Nasdaq, has acquired Adestra Ltd., a UK-based email service provider, for $56 million in cash at closing, with a $4.2 million cash holdback payable in 12 months subject to indemnification claims.
The acquisition adds $18 million in annual revenue to Upland Software. Upland plans to combine Adestra with its mobile messaging, customer engagement, and knowledge management products to serve the $5.9 billion CSM market.
However, the merger has observers wondering about this further contraction of the email service market.
Several ESPs have been acquired, only to see their brand equity decline as they were subsumed by larger organizations, they say. In some instances, clients have experienced diminishing service levels, anecdotal evidence suggests.
For its part, Upland is on the lookout for other purchase targets.
"As this transaction demonstrates, our acquisition pipeline is robust, and we are actively pursuing additional opportunities," states Jack McDonald, chairman and CEO of Upland Software.
He adds: "Adestra broadens Upland's product portfolio, strengthens our CXM solution suite, and builds our sales capacity and footprint.”
McDonald says “the transaction is immediately and meaningfully accretive to Adjusted EBITDA per share and takes Upland to an approximate $190 million annualized revenue run rate.”
In hindsight, there were signs that Adestra was preparing to be acquired. Earlier this year, in an apparent cost-cutting move, it eliminated several U.S. marketing and event positions, and U.S. marketing was taken over by the UK team.
Upland will add the Adestra portfolio to its CXM Solution Suite, which it says will now includes multichannel messaging and email along with automated mobile conversations via SMS, MMS, and RCS. Upland also offers , mobile wallet, Voice of Customer and Voice of Employee services.In addition, the company will gain from Adestra's “established presence” in the restaurant and retail, travel, media and publishing, and nonprofit fields, states Jed Alpert, SVP of customer experience management solutions at Upland Software