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Twilio Snaps Up Zipwhip For $850M; Street Says Buy

Cloud communications platform Twilio (TWLO) has agreed to acquire Zipwhip for a consideration of $850 million. The transaction, which consists of cash and stock in equal parts, is expected to close by the end of 2021.

Zipwhip is a business-texting platform with more than 30,000 customers in North America. Zipwhip’s technology solutions help businesses make their toll-free phone lines and landlines text-enabled, expanding their means of reaching customers. The company has clocked over 400% growth over the past three years.

Simon Khalaf, SVP and General Manager of the Twilio Communications Platform said, “Messaging is becoming a preferred way for consumers to engage with brands, therefore it’s critical to provide multiple messaging options.” (See Twilio stock analysis on TipRanks)

Khalaf added, “By bringing together the world’s leading cloud communications platform and a trusted partner in the messaging ecosystem, we have the ability to deliver more secure, high-quality toll-free traffic at scale.”

The acquisition brings Twilio closer to its vision of building the world’s leading customer engagement platform. Twilio estimates this acquisition to be modestly accretive to its top line and gross margin.

On May 14, Mizuho Securities analyst Siti Panigrahi reiterated a Buy rating on the stock with a $400 price target (34.6% upside potential).

Panigrahi noted that Twilio has laid the groundwork for long-term, profitable growth in 2022 after a calibrated investment phase in 2021.

Consensus among analysts is that Twilio is a Strong Buy based on 14 Buys and 2 Holds. The average analyst price target of $454 implies 52.8% upside potential. Shares have gained about 62% over the past year.

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