VIENNA, Va. & ATLANTA--(BUSINESS WIRE)--Kaleyra, Inc. (NYSE: KLR) a rapidly growing cloud communications software provider delivering a secure system of application programming interfaces (APIs) and connectivity solutions in the API/Communications Platform as a Service market, today announced it has signed a definitive agreement to acquire mGage, a leading global mobile messaging provider for $215 million in cash and Kaleyra common stock.
mGage, a Vivial company, is a best-of-breed mobile messaging solution allowing enterprise clients across a diverse range of end-markets to effectively engage with their customers through all mobile channels for a variety of use cases. mGage serves its customers through its cloud-based enterprise mobile messaging platform Communicate Pro, their API solution Connect, as well as Omnichannel mobile messaging offering such as SMS, MMS and RCS.
Communicate Pro is mGage’s cloud-based, enterprise-level messaging platform that connects brands with their customers through all major mobile messaging channels. mGage’s enterprise-grade APIs allow clients to seamlessly build on existing messaging programs without the need for extensive development. mGage is one of only four mobile messaging providers with direct connections to all major U.S. carriers, providing unique network performance and cost advantages.
mGage’s unique offering supports several of the world’s most valuable brands spanning a diverse range of end markets which has created a solid business model based on recurring message volume and negligible churn. Moreover, mGage’s top-10 clients have an average tenure of over 10 years. mGage’s industry leading product offerings and long-term blue-chip customer base has generated 20%+ revenue growth, 30%+ gross margin profile, high-teens EBITDA margin profile along with generating free cash flow at scale.
“We are thrilled to welcome mGage, its customers, and the entire mGage team to the Kaleyra family. Kaleyra and mGage together are uniting two world class enterprise cloud communications companies to create a top-5 global CPaaS platform with a diversified and balanced product portfolio and geographical representation. On a proforma basis, in 2021 Kaleyra and mGage will process over 50 billion transactions worldwide, with approximately 31% of revenue coming from North America, over 30% coming from Europe and the remainder evenly split between APAC and Latin America. This transaction makes Kaleyra one of the most prominent and geographically diverse CPaaS companies in the world, combining the Omnichannel Kaleyra platform with the complementary mGage footprint and top class customer portfolio,” commented Dario Calogero, Kaleyra’s Founder and Chief Executive Officer. “This combination will accelerate and expand Kaleyra’s opportunity to serve the CPaaS market which is expected to reach $26 billion in 2025 with a compound annual growth rate of 35% and consolidate the A2P Enterprise messaging market which is expected to reach $78 billion in 2022. We expect, on a pro forma basis, the new Kaleyra to generate more than $350 million in revenue for fiscal year 2021, increased scale, an enhanced margin profile and robust free cash flow.”
“We are pleased to support Kaleyra’s acquisition of mGage. The newly combined company will be a leading player in the mobile messaging industry and is well positioned to continue the strong performance and growth that mGage has experienced serving enterprise customers under the leadership of CEO, Jim Continenza,” said David Posnick, Senior Managing Director at Blackstone, the controlling shareholder of mGage.
In connection with the acquisition of mGage, Kaleyra will fund a portion of the acquisition with (i) $200 million of aggregate principal amount of senior unsecured convertible notes due 2026, with certain institutional investors and (ii) $125 million of gross proceeds from the issuance of Kaleyra common stock in a Private Investment in Public Equity (PIPE) transaction, with certain institutional investors.
Oppenheimer & Co Inc. served as exclusive financial advisor to Kaleyra, with DLA Piper LLP (US) serving as legal counsel. Oppenheimer & Co Inc. served as exclusive placement agent for the convertible notes and PIPE transaction. Guggenheim Securities LLC served as exclusive financial advisor to mGage and Vivial, with Weil, Gotshal & Manges LLP and Akin Gump Strauss Hauer & Feld LLP serving as legal counsel.
Acquisition Details
Under the terms of the acquisition agreement, Kaleyra will acquire mGage for a total purchase price of approximately $215 million, subject to adjustments. The consideration to mGage shareholders will consist of cash in the amount of $195 million and 1,600,000 shares of Kaleyra common stock.
Kaleyra will fund the cash consideration to mGage shareholders and related transaction costs with a combination of $200 million in senior unsecured convertible notes and the sale of 8,400,000 shares of common stock in a PIPE offering, for a total share issuance of 10,000,000 shares of common stock at a price of $125 million. Both the convertible notes and the common stock sales will close immediately prior to the closing of the mGage acquisition, which is expected to occur in the second quarter of 2021.
About mGage, a Vivial Company
mGage is a global mobile engagement provider helping brands create powerful and interactive connections with customers. We partner with enterprises to deliver high volume time-sensitive promotional and transactional messages across key messaging channels including SMS, MMS and RCS. We serve 1,000+ enterprises and are a trusted connection for more than 600 carriers across the globe. Our broad and deep expertise in the ever-changing mobile technology industry makes us sought-after experts, trusted advisors and the go-to partner for innovative companies that look to use mobile to their best competitive advantage. For more information, visit mGage.com.
About Kaleyra Inc.
Kaleyra, Inc. (NYSE American: KLR) (KLR WS), is a global group providing mobile communication services for financial institutions and enterprises of all sizes worldwide. Through its proprietary platform, Kaleyra manages multi-channel integrated communication services on a global scale, comprising of messages, push notifications, e-mail, instant messaging, voice services and chatbots. Kaleyra’s technology today makes it possible to safely and securely manage billions of messages monthly with a reach to hundreds of MNOs and over 190 countries. For more information: https://www.kaleyra.com/.
