May 5, 2020 / 5:05 AM / 25 days ago

Sweden's Sinch to acquire SAP Digital Interconnect for 225 million euros

FILE PHOTO: A man walks past a SAP logo during the company's annual general meeting in Mannheim, Germany, May 15, 2019. REUTERS/Ralph Orlowski

STOCKHOLM (Reuters) - Swedish cloud computing services provider Sinch AB (SINCH.ST) said on Tuesday it would acquire SAP Digital Interconnect, a unit of SAP SE (SAPG.DE), for 225 million euros ($245 million) in a deal that will boost its presence in the United States.

Sinch, which has a scalable platform for messaging, voice and video, said cost savings from the combination of the companies on a preliminary basis were expected to reach 11 million euros in the fiscal year 2022.

Sinch will finance the transaction using cash at hand and available credit facilities, it said in a statement.

The Stockholm-based company had net sales of 5.04 billion crowns ($512.2 million) last year, while SDI sales reached 340 million euros for the twelve months ended March 31.

Sinch said the deal significantly strengthens the firm’s operations in the United States and gives it a larger presence in the Bay Area, where SDI is headquartered.

“It also grows the company’s business in Europe, Asia-Pacific and India,” it said.

The transaction, expected to close in the second half of 2020, values the acquired business at an EV/EBITDA multiple of 14.6x, or 8.5x including estimated synergies at the full run-rate.

Sinch added that it would pay SAP a termination fee of 11 million euros if the transaction was not completed and certain conditions were met.

Sinch said in March that it would buy Wavy, part of Movile Group, in a deal valued at $119 million.

Reporting by Helena Soderpalm and Juby Babu; Editing by Amy Caren Daniel and Simon Johnson

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