Combination will create a top-5 global CPaaS
platform with strong positions in the Americas, Europe and APAC
On a pro forma basis, existing North America
customer base will be approximately 31% of revenue
On a pro forma basis, 2021 revenue is expected
to exceed $350 million, more than double Kaleyra’s 2020 revenue
Kaleyra, Inc. (NYSE: KLR) (KLR WS) (“Kaleyra” or the “Company”)
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 (CPaaS) 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.
Conference Call Details
Management will conduct an investor conference call that same
day at 8:00 a.m. EST (5:00 a.m. PST) to discuss this transaction.
Questions will be taken after management’s presentation. A live
webcast of the call and the replay will be available in the
Investors section of the Kaleyra website at
https://investors.kaleyra.com/news-events/ir-calendar.
To Participate via Telephone: US: 877-407-0792
International: 201-689-8263 Conference ID: 13716817
Replay of the call: US: 844-512-2921 International:
412-317-6671 Start Date: Friday February 19, 2021, 11:00 a.m. ET
End Date: Friday March 5, 2021, 11:59 p.m. ET
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/.
Cautionary Statement Regarding Forward Looking
Statements
This press release contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, including with respect to the proposed transaction between
mGage and the Company, including statements regarding the
anticipated benefits of the transaction, the anticipated timing of
the transaction, expansion plans, projected future results and
market opportunities of mGage. These forward-looking statements
generally are identified by the words “believe,” “project,”
“expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,”
“opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,”
“will continue,” “will likely result,” and similar expressions.
Forward-looking statements are predictions, projections and other
statements about future events that are based on current
expectations and assumptions and, as a result, are subject to risks
and uncertainties. Many factors could cause actual future events to
differ materially from the forward-looking statements in this press
release, including but not limited to: (i) the risk that the
transaction may not be completed in a timely manner or at all,
which may adversely affect the price of the Company’s securities,
(ii) the failure to satisfy the conditions to the consummation of
the transaction, including the approval by the stockholders of the
Company of the issuance of shares as merger consideration and for
the PIPE and Convertible Note investments by the Company and the
receipt of certain governmental and regulatory approvals, (iii) the
inability to complete the PIPE and Convertible Note investments in
connection with the transaction, (iv) the occurrence of any event,
change or other circumstance that could give rise to the
termination of the merger agreement, (v) the effect of the
announcement or pendency of the transaction on mGage’s business
relationships, operating results and business generally, (vi) risks
that the proposed transaction disrupts current plans and operations
of mGage and potential difficulties in mGage employee retention as
a result of the transaction, (vii) the outcome of any legal
proceedings that may be instituted against mGage or against the
Company related to the merger agreement or the transaction, (vii)
the ability to maintain the listing of the Company’s securities on
a national securities exchange, (ix) the price of the Company’s
securities may be volatile due to a variety of factors, including
changes in the competitive and highly regulated industries in which
the Company plans to operate or mGage operates, variations in
operating performance across competitors, changes in laws and
regulations affecting the Company’s or mGage’s business and changes
in the combined capital structure, (x) the ability to implement
business plans, forecasts, and other expectations after the
completion of the proposed transaction, and identify and realize
additional opportunities, (xi) the risk of downturns and a changing
regulatory landscape in the highly competitive healthcare industry
and (xii) the size and growth of the market in which mGage
operates. The foregoing list of factors is not exhaustive. You
should carefully consider the foregoing factors and the other risks
and uncertainties described in the “Risk Factors” section of the
Company’s Annual Report on Form 10-K for the year ended December
31, 2019, the Company’s Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2020, June 30, 2020 and September 30, 2020
and other documents filed by the Company from time to time with the
U.S. Securities and Exchange Commission (the “SEC”). These filings
identify and address other important risks and uncertainties that
could cause actual events and results to differ materially from
those contained in the forward-looking statements. Forward-looking
statements speak only as of the date they are made. Readers are
cautioned not to put undue reliance on forward-looking statements,
and mGage and the Company assume no obligation and do not intend to
update or revise these forward-looking statements, whether as a
result of new information, future events, or otherwise. Neither
mGage nor the Company gives any assurance that either mGage or the
Company or the combined company will achieve its expectations.
Additional Information and Where to Find It /
Non-Solicitation
In connection with the proposed transaction, the Company intends
to file a combination proxy statement/prospectus registration
statement on Form S-4 with the SEC. The proxy statement will be
sent to the stockholders of the Company. The Company and mGage also
will file other documents regarding the proposed transaction with
the SEC. Before making any voting decision, investors and security
holders of the Company are urged to read the proxy statement and
all other relevant documents filed or that will be filed with the
SEC in connection with the proposed transaction as they become
available because they will contain important information about the
proposed transaction. Investors and security holders will be able
to obtain free copies of the proxy statement and all other relevant
documents filed or that will be filed with the SEC by the Company
and mGage through the website maintained by the SEC at
www.sec.gov.
The documents filed by the Company with the SEC also may be
obtained free of charge at the Company’s website at
https://www.kaleyra.com/ or upon written request to the Company,
c/o Kaleyra, Inc., Via Marco D’Aviano, 2, Milano MI, Italy.
Participants in Solicitation
The Company and mGage and their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies from the Company’s stockholders in
connection with the proposed transaction. Information about the
Company’s directors and executive officers and their ownership of
the Company’s securities is set forth in the Company’s filings with
the SEC. A list of the names of such directors and executive
officers and information regarding their interests in the business
combination will be contained in the combination proxy
statement/prospectus when available. You may obtain free copies of
these documents as described in the preceding paragraph.
No Offer or Solicitation
These communications do not constitute an offer to sell or the
solicitation of an offer to buy any securities, or a solicitation
of any vote or approval, nor shall there be any sale of securities
in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act, or an exemption
therefrom.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210219005248/en/
Investors Michael Bowen ICR,
Inc. Michael.Bowen@icrinc.com ir@kaleyra.com 203-682-8299
Marc P. Griffin ICR, Inc. Marc.Griffin@icrinc.com ir@kaleyra.com
646-277-1290
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