This afternoon, Intuit confirmed persistent rumors that it was in the process of buying MailChimp, detailing a $ 12 billion transaction that will bring the well-known email infrastructure company into its corporate tenure.
Intuit is not a very well known player in the email marketing space. Instead, the company is best known for its TurboTax software, and associated lobbying by the US government to ensure its rental search can continue, its recent purchase of CreditKarma, and its most outdated acquisition of Mint.
The Mailchimp transaction will comprise both cash and shares.
The question that is circling around your brain right now is the right thing to do: Why is Intuit spending 10% of its market capitalization to buy an email marketing company?
According to a statement, Intuit believes that the agreement “advances” its “prosperity of power around the world and its strategy to become an expert platform powered by AI.” Normally, at this juncture, I would turn the company’s corporate speech into English, but I’m struggling.
The company had more to say, that its purchase of Mailchimp would allow it to “accelerate two of [Intuit’s] previously shared strategic Big Bets: to become the center of small business growth; and to disrupt the small business mid-market. “.
This is a bit more grokkable. Intuit’s Quickbooks service is a well-known product in the SMB space. Presumably, Intuit estimates that it can sell more services to its existing small business customers. It still feels like a bit of a stretch, but we assume the eggheads have come to the conclusion that subsequent corporate synergies will more than outweigh the sticker shock the deal includes.
Intuit shares are up a scant 0.15% in after-hours trading, implying something of a Wall Street shrug on the transaction; Given how well filtered the deal was on its way to consummation, the combination may have already been valued at Intuit’s stock price.
For Atlanta, where MailChimp is based, the deal is a victory. MailChimp is a famous startup company, so if you were looking for confirmation that you can build decacorns outside of Silicon Valley and without the help of venture capital, here’s the evidence.