Kaleyra has agreed to buy global mobile messaging provider mGage in a cash-and-stock deal worth $215 million. Shares of the mobile communication services provider rose 1.5% and closed at $16.93 on Feb. 19. The company said that Kaleyra (KLR) and mGage on a proforma basis will process more than 50 billion transactions globally, with North America generating 31% of revenue, Europe contributing 30% and the balance coming equally from APAC and Latin America. After completion of the acquisition, Kaleyra is expected to generate more than $350 million in revenue for the fiscal year 2021. The purchase price includes $195 million in cash and 1.6 million shares of Kaleyra common stock. Kaleyra is looking to fund the deal and related costs through an issue of senior unsecured convertible notes due 2026 worth $200 million and the sale of 8.4 million shares of common stock via a private investment in public equity (PIPE) offering. A total of 10 million shares will be issued for the PIPE offering for a total value of $125 million. The transaction is expected to close in the second quarter of 2021. The sale of common stock and the convertible notes will close before the deal closure. (See Kaleyra stock analysis on TipRanks) Kaleyra CEO Dario Calogero said, “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.” “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,” he added. On Feb. 16, Kaleyra reported 4Q results. The company incurred a loss of $0.15 per share in the quarter, compared with the $0.09 loss per share estimated by analysts. Total revenues generated in the quarter amounted to $44.3 million, above analysts’ expectations of $42.2 million. For the first quarter of 2021, the company projects revenue to be in the range of $40.5 million to $41.5 million. On Feb. 17, Northland Securities analyst Michael Latimore reiterated a Buy rating on the stock with a price target of $23 (36% upside potential) after the company “returned to strong y/y growth in 4Q, up 24%, aided by tailwinds in ecommerce, India and voice services, and solid recovery in Italy.” Kaleyra shares have exploded almost 109% over the past year, while the stock still scores a Strong Buy consensus rating based on 3 unanimous Buys. That’s alongside an average analyst price target of $26, which implies upside potential of about 54% to current levels. Furthermore, Kaleyra scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations. Related News: Western Alliance To Buy AmeriHome For $1B; Shares Drop 3.5% Match Group Snaps Up Hyperconnect For $1.73B; Shares Gain 2.4% Redfin To Buy RentPath For $608M; Shares Jump 12% More recent articles from Smarter Analyst: Stifel Financial Buys North Atlantic Capital’s Future Venture Investment Business AG Mortgage Spikes 18% After 4Q Sales Crush Estimates Essent Group Misses 4Q Earnings Estimates; Street Stays Bullish eHealth Spikes 6.3% After Hudson Executive Shores Up Stake To 5.8%
Kaleyra, Inc. (NYSE: KLR) inked an agreement to acquire mobile messaging provider mGage for $215 million in cash and Kaleyra shares. mGage will receive $195 million in cash and the remaining in 1.6 million shares of Kaleyra common stock. mGage’s cloud-based enterprise mobile messaging platform includes Communicate Pro, their API solution Connect, and Omnichannel mobile messaging offerings like SMS, MMS, and RCS. Communicate Pro is mGage’s cloud-based, enterprise-level messaging platform for connecting brands with their customers via major mobile messaging channels. mGage’s enterprise-grade APIs enables clients to build on existing messaging programs seamlessly. mGage is one of only four mobile messaging providers with direct connections to all major U.S. carriers, with unique network performance and cost advantages. mGage’s has produced over 20% revenue growth, over 30% gross margin, high-teens EBITDA margin, and compelling free cash flow. In 2021, Kaleyra and mGage will process over 50 billion global transactions, with 31% of revenue coming from North America, over 30% coming from Europe, and the remainder from APAC and Latin America on a proforma basis. “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,” said Kaleyra CEO Dario Calogero. Kaleyra borrowed $200 million in senior unsecured convertible notes due 2026 and sold 8.4 million shares in a PIPE (private investment in public equity) offering for a total share issuance of 10 million shares at $125 million to fund the acquisition. Price action: KLR shares are down 2.64% at $16.24 on the last check Friday. See more from BenzingaClick here for options trades from BenzingaTwilio Raises .5B In Upsized Share SaleCGI To Buyback 4.2M Shares From CDPQ© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Kaleyra Inc earnings call for the period ending December 31, 2020.