Twilio Inc. is in advanced talks to invest up to $750 million in Syniverse Technologies before a possible public listing of the private-equity-owned messaging company, the Wall Street Journal has learnt. Shares of Twilio (TWLO) were up by 1.8% in pre-market trading.
The investment by the cloud communications company could be announced as early as March 1, according to the WSJ. Private equity firm Carlyle Group took Syniverse private in 2010 in a deal valued at more than $2 billion.
According to the WSJ report, the Twilio investment could also be followed by a merger between Syniverse and a special-purpose acquisition company (SPAC) in the coming months. In case of such a deal, Syniverse would be valued in the range of $2 billion to $3 billion, including debt.
However, there is no guarantee that Syniverse will go public either through an initial public offering (IPO) or a SPAC deal. The investment by Twilio would also involve “a commercial arrangement that would send a significant amount of business its way,” the WSJ report said.
Last month, TWLO surprised investors with non-GAAP diluted earnings per share (EPS) of $0.04 in 4Q versus analysts’ expectations of a loss of $0.08 per share. Revenues came in at $548.1 million, up by 65% year-on-year, and beating consensus estimates of $454.7 million. (See Twilio stock analysis on TipRanks)
On Feb. 18, Northland Securities analyst Michael Latimore raised the stock’s price target from $390 to $500 and assigned a Buy rating. Latimore said, “Corporate need for more and varied customer interactions, and corporations accelerating digital transformation in 2020 created strong demand for Twilio’s APIs in 4Q and 2020. 4Q revs increased 65% y/y, and 59% organically, vs $455 mil consensus.”
The rest of the Street is bullish on the stock with a Strong Buy consensus rating based on 19 Buys and 2 Holds. The average analyst price target of $510.53 implies around 30% upside potential to current levels.
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