Saturday, 07 December 2019

Sinch expands to Brazil through acquisition of TWW

posted by Sinch
Thursday 10 October 19

Sinch AB (publ), a global leader in cloud communications for mobile customer engagement, has entered into a definitive agreement to acquire TWW do Brasil S.A. for an enterprise value of BRL 180.750 million. Using today’s SEK/BRL exchange rate of 2.43, this corresponds to SEK 439 million. Founded in 1996, TWW is today the 3rd largest SMS connectivity provider in Brazil…

Sinch AB (publ), a global leader in cloud communications for mobile customer engagement, has entered into a definitive agreement to acquire TWW do Brasil S.A. for an enterprise value of BRL 180.750 million. Using today’s SEK/BRL exchange rate of 2.43, this corresponds to SEK 439 million.

Founded in 1996, TWW is today the 3rd largest SMS connectivity provider in Brazil. The company serves more than 3,000 businesses, both large and small, including many of Brazil’s leading enterprises in the banking, retail and education sectors. Messaging volumes are continuously increasing and in 2018, TWW delivered 3.4 billion messages on behalf of its customers. The company employs 37 people in São Paulo, Brazil.

“Sinch has won the trust of some of the world's largest enterprises through high-quality message delivery and international reach. The acquisition of TWW further strengthens this value proposition and gives us domestic presence in a rapidly expanding, dynamic growth market”, comments Oscar Werner, CEO of Sinch.

With a population of 210 million, Brazil is the largest country in Latin America by population, GDP, and geographical size. It is the fifth most populous country in the world and is now seeing a rapid uptake in smartphone penetration and mobile internet usage. Customer engagement through mobile messaging continues to gain popularity, and a rapid uptake of new technologies presents opportunities for Sinch to offer its broader portfolio of next-generation messaging, voice and video to TWW’s customers.

In 2018, TWW recorded revenues of BRL 134m, gross profit of BRL 35m, and EBITDA of BRL 17.5m. In Swedish krona, using today's 2.43 SEK/BRL exchange rate, this corresponds to revenues of SEK 326m, gross profit of SEK 85m, and EBITDA of SEK 43m. The total price paid by Sinch implies an EV/EBITDA-multiple of 8.9x based on expected adjusted EBITDA for the full year 2019.

“The success of our business is built on quality delivery and an unflinching focus on customer satisfaction. Together with Sinch, we can continue our growth journey and launch new products in next-generation messaging, voice and video. Our greatest opportunities are still ahead of us”, comments Anthony Pain, CEO and Chairman of TWW.

The transaction is expected to close in the second half of October 2019 and will be financed using Sinch’s available credit facilities.

Sinch has a financial target to maintain net debt/adjusted EBITDA below 2.5x over time. As of Q2 2019, net debt/adjusted EBITDA was 1.0x when measured on a rolling, twelve-month basis. The acquisition of TWW increases Sinch net debt/adjusted EBITDA by around 0.8x. Together with the recent acquisition of myElefant SAS, this implies that Sinch pro forma net debt/adjusted EBITDA rises to around 2.2x following the two acquisitions.

Handelsbanken Capital Markets is serving as a financial advisor to Sinch for the acquisition.


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