trending Market Intelligence /marketintelligence/en/news-insights/trending/4fidkTDZKsMuc98bUnS8Ew2 content esgSubNav
In This List

Vonage buying communications API provider Nexmo


According to Market Intelligence, December 2022


Insight Weekly: Layoffs swell; energy efficiency PE deals defy downturn; 2023 global risk themes


MediaTalk | Episode 30: US retailers prep for weaker online sales, holiday spending demand


Insight Weekly: Energy crisis cripples Europe; i-bank incomes rise; US holiday sales outlook

Vonage buying communications API provider Nexmo

VonageHoldings Corp. agreed to acquire Nexmo Inc., a San Francisco-basedcommunications platform-as-a-service provider, for $230 million in cash andstock.

Nexmo shareholders will receive an additional earn-out of upto $20 million if Nexmo meets certain performance targets.

Nexmo provides communication application program interfacesfor text messaging and voice communications, allowing developers and enterprisesto embed contextual communications into mobile apps, websites and businessworkflows via text, social media, chat apps and voice. Vonagebelieves that with the addition of Nexmo, it will have a total addressablemarket of nearly $28 billion by 2018.

Of the total deal consideration, $195 million will be paidat the closing, consisting of a minimum of $159 million of cash and a maximumof $36 million in stock. Vonage may choose to substitute $23 million ofadditional cash for stock at closing. The remaining $35 million ofthe $230 million purchase price will be paid in the form of restricted cash andrestricted stock for Nexmo management and employees, both subject to vestingrequirements over time. Vonage said it is financing theacquisition through a combination of cash on hand and revolver capacity. Pro formafor the transaction, net debt to EBITDA will be about 2.25x.

Vonage said it is paying a multiple of less than 2xprojected Nexmo 2017 revenue, assuming full payout of the additional earn-out.The company expects annual cost synergies of $5 million from the transaction,primarily in cost of telephony services and general and administrative expenses.

Upon closing, Nexmo co-founder and CEO Tony Jamous will joinVonage as president of Nexmo, along with company co-founder and ChiefTechnology Officer Eric Nadalin and Nexmo's 170-person team.

J.P. Morgan Securities LLC served as lead financial adviserto Vonage. Weil Gotshal & Manges LLP served as legal counsel to Vonage.G2020 Advisors LLC served as financial adviser and Goodwin Procter LLP servedas legal counsel to Nexmo.