SBC Reaches Deal To Acquire AT&T for $16 Billion

SBC Communications said today it will take over its former parent company, AT&T, in a stock-and-cash deal worth around US$16 billion, a blockbuster takeover that marks just the latest major shift in a rapidly evolving industry.

Over the weekend, the boards of both companies approved a deal in which AT&T shareholders will receive stock worth $18.41 per share and a one-time dividend of $1.30 for each share they hold. Around $15 billion of the total deal value will be paid out in stock.

Regulatory approval will be needed and is widely expected to come with little or no qualifications.

Historic Merger

The deal ends AT&T’s 120-year run as an independent company, one that began in the earliest days after the invention of the telephone and took a dramatic turn when regulators split it up into regional phone companies and a stand-alone long-distance company in 1984. Now, 20 years later, it sees itself acquired by one of the “Baby Bell” companies created by that breakup.

“What a story. This is historic,” Telecom analyst Jeff Kagan told the E-Commerce Times. “AT&T is not the same company it was ten years ago but it’s still historic.”

The two companies said the combination leverages their respective strengths: SBC’s role as a regional telecom provider and its menu of high-speed Internet services for consumers and AT&T’s business class services.

It also creates a stronger company financially and technologically, one that is in a position to capitalize on the shift toward Internet Protocol-based delivery of servers, SBC CEO Edward E. Whitacre Jr. said.

“The communications industry is undergoing a profound transformation,” Whitacre said. “To manage this evolution, customers need a partner with the resources to provide new service platforms and product sets, while maintaining world-class reliability and security. This merger creates that company.”

Giving Them the Business

The deal immediately thrusts SBC ahead of other regional telecom carriers in terms of business services. It might also put long-distance carrier MCI, which also has a strong foothold in the enterprise arena, on the sales block, Kagan said. MCI could “be acquired quickly by one of the other Bells,:Verizon or Bellsouth or Qwest.”

In addition to customer relationships with “virtually all of the Fortune 1000,” as SBC put it, the deal gives SBC access to more than two dozen data centers in the U.S. and 13 in foreign countries.

The deal also makes sense for AT&T, Kagan said. “Yesterday it was the biggest long distance company, but today it is transforming itself into a business communications services company,” he added. “This is much different than the company most people think of when they think of AT&T.”

In fact, much of what AT&T built itself into as a response to the changing telecom market — buying up wireless assets and building an extensive cable TV network — was undone in spinoffs and sales in recent years as the company focused on its core business customers.

Whitacre said that over time, the merged company will be able to realize up to $15 billion worth of cost synergies, including savings realized through the consolidation of facilities and operations and enhanced revenues as it bundles more services to more customers. AT&T will get three seats on the board of the combined company, which will be run by Whitcare as CEO.

Size Matters

In dollar value, the deal pales in comparison to recent wireless sector deals. Cingular, which is part-owned by SBC, bought AT&T Wireless for $41 billion, while Nextel and Sprint merged in a deal worth $35 billion.

Consolidation is not likely to slow down, given the regulatory environment under the Bush administration that favors a hands-off approach and because the ability to offer more services is a critical differentiator in the telecom space.

Research firms have long said conditions have been ripe for consolidation across the telecom sector, and many believe recent deals might only be the start. In addition to further consolidation in the U.S., the same set of circumstances are in place in Europe, Japan and elsewhere.

Gartner analyst Jason Chapman told the E-Commerce Times that although it seems there are relatively few large players in the telecom space, the industry is actually still primed for more consolidation, with regional carriers likely to merge and long-distance companies used as an add-on to wireless and regional phone services.

“The name of the game is going to be services, and if you’re bigger, you can better afford to take on the investment necessary to make them available,” Chapman said.

Convincing the Analysts

Some analysts might need convincing of those benefits, however, as several already expressed surprise at the price tag for the SBC-AT&T deal. SBC might have sensed a need to lay out its case for the merger, holding a lengthy conference call with analysts on the deal today and announcing that a live Webcast would be held for analysts and investors tomorrow.

Meanwhile, SBC and AT&T did not specify what its new name would be after the merger, but said the AT&T moniker would be kept intact in some way. “We value the heritage and strength of the AT&T brand, which is one of the most widely recognized and respected names throughout the world, and it will certainly be a part of the new company’s future.”

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Intuit’s $12B Mailchimp Purchase Breathes New Life Into Email Marketing

Intuit on Monday announced an agreement to acquire Mailchimp, a global customer engagement and marketing platform for small and mid-market businesses, for $12 billion in cash and stock advances. The purchase could be the linchpin that thrusts the mostly financial software company into solving more fertile mid-market business challenges for its customers.

The planned acquisition is part of Intuit’s mission to become an AI-driven expert platform. With the acquisition of Mailchimp, Intuit will accelerate two of its previously-shared strategic big bets: to become the center of small business growth and to disrupt the small business mid-market, said the company in its announcement.

Intuit’s acquisition of Mailchimp sends a great message to all entrepreneurs around the globe that venture capital is not always necessary, observed Michael Kawula, co-founder of CBA, a marketing agency for YouTube monetization. Mailchimp is a bootstrapped success story that has not raised any outside venture capital.

“This is a very clever growth strategy for Intuit, who wants to get in front of SMBs, which is difficult and expensive. Similar to HubSpot’s recent purchase of The Hustle newsletter, a much smaller acquisition, this also is brilliant,” he told the E-Commerce Times.

The acquisition marks a significant impact in industry, according to Osiris Parikh, sales marketing manager at Lilius. He also sees the deal as another reminder that email marketing is not dead — and data is power.

“Intuit has made a strong move to broaden its portfolio and become a leader in catering to the needs of SMBs. It is also a great story of success during Covid-19,” he told the E-Commerce Times.

Deal Basics

Intuit provides a global technology platform that makes TurboTax, QuickBooks, Mint, and Credit Karma. Intuit and Mailchimp will offer an innovative, end-to-end customer growth platform that allows customers to get their business online. It will also enable them to manage marketing, customer relationships, payment processes, and access insights and analytics, along with optimizing their cash flow and staying compliant with experts at their fingertips, according to Intuit.

Key to this process is Intuit’s ability to enable businesses to combine their customer data from Mailchimp and QuickBooks’ purchase data to get the actionable insights they need to grow and run their businesses with confidence.

“We’re focused on powering prosperity around the world for consumers and small businesses. Together, Mailchimp and QuickBooks will help solve small and mid-market businesses’ biggest barriers to growth, getting and retaining customers,” said Sasan Goodarzi, CEO of Intuit.

Mailchimp brings to Intuit technology at scale along with global customer reach.

Founded in Atlanta, in 2001, Mailchimp began by offering email marketing solutions. The company evolved into offering customer engagement and marketing automation processes fueled by an AI-driven technology stack. Mailchimp’s data and technology spans 70 billion contacts and more than 250 rich partner integrations. Its AI-powered automation at scale fuels 2.2 million daily predictions.

“Over the past two decades, we have vastly expanded and evolved Mailchimp’s platform to help millions of small businesses around the world start and grow,” said Ben Chestnut, CEO and co-founder of Mailchimp.

Why Mailchimp’s Worth It

While the email marketing sector is pretty crowded, Mailchimp stands out in terms of size and scope. The company reportedly has 13 million total global users, 2.4 million active monthly users, and 800,000 paid customers, noted Charles King, principal analyst at Pund-IT.

“Plus, half of its customers are outside of the U.S. Additionally, while people tend to focus on the mass/might of large enterprises, small businesses are really the heart and soul of most economies,” he told the E-Commerce Times.

The acquisition likely represents a lucrative opportunity for Intuit to integrate Mailchimp data with QuickBooks and provide greater analytical capabilities to customers. The synthesis of financial and marketing data in this case provides valuable and actionable insights about an organization’s clients, added Lilus’ Parikh.

“It’s also a great diversification of offerings to centralize SMB operations through one platform and benefit from Mailchimp’s established user base,” he said.

Another supporting factor for Intuit’s interest in Mailchimp is the renewed stature of email, according to Elice Max, co-owner of EMUCoupon and someone who has been involved in online marketing for eight years.

“Email marketing has made a comeback in recent years. With increased digitization caused by the pandemic, all digital mediums including email have gained a renewed importance,” she told the E-Commerce Times.

Email Marketing’s Resurgence

Technology giants are looking to build more integrated and holistic solutions. Microsoft recently bought Clipchamp, a video production tool. Both companies are looking to build platforms for the new tech-savvy SMBs, Max Suggested.

“More than anything, it means a renewed confidence in the field. Experts have been talking about the death of email marketing for a while now. But a $12 billion acquisition by a big player like Intuit means email promotion is alive and kicking,” she said.

Another factor is Intuit keeping its eye on the ball. It is important to remember the significance of Mailchimp as the pioneer in marketing automation and email marketing in particular.

“Intuit is looking to make a statement that it wants to become more than a financial software company,” Max observed.

QuickBooks Synergies

One of the motivations that lies behind Intuit’s purchase of Mailchimp is its desire to lead a revolution in the CRM capabilities of SMBs, according to Will Ward, CEO of Translation Equipment HQ . Think about the effect the pandemic has had on the popularity of remote work and the amount of remote SMBs being established.

“You would expect there to be a lot of growth potential here in the next few years. With Mailchimp and QuickBooks, Intuit is providing an end-to-end customer growth platform, and with around $20 billion invested already its belief in SMBs is evident,” Ward told the E-Commerce Times.

Like any other system that handles transactions such as orders and payments, you need to work closer to the actual customer channels. With the Intuit e-commerce product, launched about a year ago, this seems like a natural step by adding marketing automation and reaching out with its e-commerce offering to the MailChimp customer base, suggested Johan Liljeros, general manager and senior commerce advisor, North America for Avensia.

“The acquisition has added synergies between the platforms while still being able to operate as independent platforms. Looking at Intuit’s offerings, it appears they are moving towards expanding [into] digital transactional experience,” he told the E-Commerce Times.

Final Thoughts

Email marketers should be ready for disruption along with other business services providers. Intuit has been both savvy and aggressive in the way it built its business, effectively becoming the 800-pound gorilla of small business accounting and tax solutions, according to Pund-IT’s King.

“With that kind of ally behind Mailchimp, life is going to become a whole lot more ‘interesting’ for other email marketers,” he predicted.

The Intuit-Mailchimp deal should offer Intuit customers significant benefits, such as new solutions and services for bolstering their businesses. At the same time, the deal highlights the fact that old technologies can continue to be vital and dynamic.

“For years, many have claimed that email is dead or dying and quickly being replaced by whatever the tech du jour happens to be. Mailchimp — and now Intuit — beg to differ,” King quipped.

Jack M. Germain

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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Adobe’s Frame.io Buy Answers Video Collaboration Needs

video production

Adobe on Aug. 19 announced it has entered into a definitive agreement to acquire cloud-based video collaboration platform Frame.io. The acquisition joins Adobe Creative Cloud’s video capabilities with Frame.io’s cloud-first workflow functionality to create an end-to-end video collaboration platform.

With over a million users across media and entertainment companies, agencies, and global brands, Frame.io accelerates the production process by enabling video editors and key project stakeholders to collaborate using cloud-first workflows. The combination of Adobe’s creative software and Frame.io’s review and approval functionality will deliver a collaboration platform that expedites the video editing process.

Video creation and consumption are experiencing tremendous growth. Video teams must produce an ever-increasing volume of content. Each video project requires various stakeholders, including video editors, producers, agencies, and clients.

Today’s video workflows are disjointed with multiple tools and communication channels being used to solicit stakeholder feedback. Frame.io eliminates the inefficiencies of video workflows by enabling real-time footage upload, access, and in-line stakeholder collaboration in a secure and elegant experience across surfaces, Adobe said in its announcement of the deal.

When the acquisition closes, Frame.io co-founder and CEO Emery Wells and co-founder John Traver will join Adobe. Wells will continue to lead the Frame.io team, reporting to Scott Belsky, chief product officer and executive vice president of Adobe Creative Cloud. Wells and Traver started Frame.io in 2015.

 

The transaction, valued at US$1.275 billion, subject to customary purchase price adjustments, is expected to close during the fourth quarter of Adobe’s 2021 fiscal year. Until the transaction closes, each company will continue to operate independently.The closure is subject to regulatory approval and customary closing conditions.

Strengthens Creative Cooperation

Collaboration is the next wave of creativity, noted Adobe. Digital collaboration is now the foundation of all creative endeavors.

“We’ve entered a new era of connected creativity that is deeply collaborative, and we imagine a world where everyone can participate in the creative process,” said Belsky. “With this acquisition, we’re welcoming an incredible customer-oriented team and adding Frame.io’s cloud-native workflow capabilities to make the creative process more collaborative, productive, and efficient to further unleash creativity for all.”

 

Adobe’s acquisition of Frame.io brings Adobe Creative Cloud’s collaboration services to video and builds on recent innovations for creative collaboration. These include Adobe Creative Cloud Libraries, Cloud Documents, Design Systems in Adobe XD, Adobe Stock, and Adobe Fonts. Those assets combined with Frame.io will make it easy for teams to collaborate across Adobe Premiere Pro, Adobe Photoshop, Adobe Illustrator, and other Adobe Creative Cloud applications, according to Adobe.

Video workflows must empower all stakeholders. The combination of Frame.io and Adobe, Creative Cloud customers, along with video editors, producers, and marketers will heighten seamless collaboration on video projects with Frame.io workflow functionality built natively in Adobe Creative Cloud applications like Adobe Premiere Pro, Adobe After Effects, and Adobe Photoshop.

“Frame.io and Adobe share a vision for the future of video creation and collaboration that brings together Adobe’s strength in video creation and production and Frame.io’s cloud-native platform,” said Wells. “We’re excited to join Adobe to continue to drive video innovation for the world’s leading media and entertainment companies, agencies, and brands.”

Innovation benefits the video ecosystem. For instance, Frame.io customers and partners will benefit from the company’s robust plug-ins and third-party application support, along with the innovation generated by the combined Adobe Creative Cloud and Frame.io teams.

With the addition of Frame.io, Adobe Creative Cloud’s commitment to enabling collaboration across all stakeholders of creativity extends beyond Adobe’s applications to the growing number of third-party applications across the creative ecosystem.

Industry Overloaded

The continuing expansion of creative content has outgrown the industry’s ability to keep up with managing productivity, according to Anthony Welgemoed, CEO and co-founder of Ziflow. His company is an online proofing and collaboration solution with over one million users.

“The volume of creative content being produced still keeps increasing,” he told TechNewsWorld.

For example, a video ad stays relevant for only five days. All of these creative teams are having to do more with the same resource, he offered.

But technology has responded with new solutions, some of which are starting to include artificial intelligence and machine learning. These new tools coming to the market are helping creators produce content faster and better.

Some of these platforms are web-based and provide some of its features for free. Two such solutions he mentioned are Figma and Canva. Figma is a web-based graphics design tool with a real-time collaborative interface. Canva is a platform used by graphic artists to edit and create custom designs in a team environment.

But as competitors to what Adobe and Frame.io offer, such products do not address the biggest bottleneck content designers face, observed Welgemoed.

“The review and approval of this content leave great production teams with less time to be creative. So really, it is just a volume of content explosion that is still ongoing, as it has been for the last two decades,” he said.

Post-Production Video Team Solutions

Adobe’s acquisition of Frame.io will focus more awareness on the need for the industry to solve the growing content collaboration issues. More competition of content services is the endgame.

While Adobe’s latest acquisition will let it leverage Creative Cloud storage, other solutions are needed to help content designers with the reviewing and approval processes. Ziflow’s platform simplifies content review and approval with its online proofing software for marketers and creatives.

“We see two types of situations among content teams. Some design teams do not use anything at all. Others are still using back and forth email exchange,” said Welgemoed.

In most cases, content creators see Ziflow’s platform as a system of record for credit production teams. Ziflow has a copy of every version of content designers produce.

“We have every comment made by every content reviewer. So using all that data, we can start building models that we can then use to automate parts of that review process, and we believe this is where we can reduce that turnaround time very significantly by leveraging AI and ML,” he explained.

Jack M. Germain

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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