Cloud Computing & Web Services f Matt Grech hMay 05, 2016

Vonage Acquires Nexmo to Accelerate Cloud Communications Growth

Vonage announced this morning that it has acquired the cloud communications platform provider Nexmo for $230 million in cash and stocks. The acquisition will accelerate Vonage’s planned growth strategy by strengthening the Company’s foothold in Cloud Communications.

Nexmo, based in San Francisco, has been providing communication application program interfaces for both voice and text communication. The platform has allowed developers and enterprises to embed “contextual communications into mobile apps, websites and business workflows via text, social media, chat apps and voice,” according to the announcement.

This acquisition drives Vonage’s mission originally established in 2014, to “become the clear leader in Cloud Communications for business,” Vonage CEO Alan Masarek said. “With the acquisition of Nexmo, we are now uniquely positioned to lead the market. By combining Vonage's rapidly growing Unified Communications as a Service (UCaaS) business, with Nexmo, the second largest player in Communications Platform as a Service (CPaaS), we are creating the future of Cloud Communications. These companies represent a set of strategic, technology and human resources assets that deliver the broadest services offering in our industry."

Nexmo has the largest global network of 650 interconnected carries and delivers a strong API-based communications platform for messaging, and even integration with popular chat apps like Facebook Messenger.

“Our API technology, global network of interconnected carriers, and messaging expertise, combined with Vonage's powerful brand, industrial-strength infrastructure and second-to-none voice capabilities will enable us to provide an unmatched value proposition to businesses,” said Nexmo CEO Tony Jamous.

Vonage said under the agreement, Nexmo shareholders will receive $230 million with additional earn-out opportunities of up to $20 million. However, these additional earn-out opportunities are dependent on Nexmo maintaining certain performance targets.

“Vonage believes that the deal consideration, including payment of the earn-out opportunity, represents a multiple of less than 2 times projected Nexmo 2017 revenue. Annual cost synergies of $5 million are projected, primarily in the areas of Cost of Telephony Services and G&A,” according to the announcement.

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