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CLX Comunication, Sending an acquisition message

by July 23, 2020No Comments

To say the last couple of months have been busy for CLX Communications is perhaps an understatement. The communications platform as a service (CPaaS) provider has bought not one but two companies in the past two months.

In March, it announced an agreement to purchase Danish company Unwire Communication for approximately DKK148 million (£ 17.5 million), adding more than 300 corporate clients in the Nordic countries to its base.

Just weeks later, CLX unveiled the acquisition of Vehicle Agency, a custom multimedia video and mobile technology company founded in 2010 in Seattle, Washington. Vehicle offers a dynamic video messaging platform for businesses, adding a new string to the CLX arc, according to VP Marketing and Online Sales Rob Malcolm.

“One of the most important considerations that is happening in all messaging companies is whether we should try to add more value beyond just having an API,” he explains. “It's always something in the back of our minds and in the back of our competitors' minds. Basically, SMS is widely commercialized, so the theory goes, the more value you can add, the better you can differentiate yourself from your competition. "

The vehicle offers CLX “the opportunity for us to add value to our customers without competing with them,” adds Malcolm. It also has a strong presence in North America and has good relationships with a number of businesses there, according to Malcolm. This is supported by the company's website, which cites campaigns for brands like AT&T, Macy, MillerCoors, and Cricket Wireless.

“North America is an interesting market because MMS in North America is very successful - A2P MMS is very successful,” he adds. “It is true that OTTs have stolen market share from SMS and MMS, but mainly on the P2P side. So the United States is committed to MMS right from the start and it is widely used, especially for marketing “.

Rob Malcolm
This is especially important given the expected increase in RCS adoption, he adds. Rich communication services combined with the opportunities offered by personalized video services create a powerful marketing tool. CLX sees “huge growth potential” with RCS once it's fully online, he explains.

“Outside of North America, MMS has always been considered unreliable and too expensive, but in the United States they managed to overcome these problems because they were quite late on the market compared to other countries,” says Malcolm.

“For us you could potentially use MMS to provide personalized videos, send a link in SMS offering a personalized video, but RCS turbo charges the entire proposal because it becomes an online video tailored for you. So we are combining a much needed delivery mechanism for the enterprise in terms of RCS, but we also aim to capitalize on macro trends because people want more personalized and targeted marketing and promotions ”.

The acquisition of Unwire, however, was much more about regional opportunities and continues a trend that CLX had seen in 2017 of buying local SMS companies with the acquisition of Xura Secure Communications, a German technology company.

Upon acquiring Xura, CLX stated: “Since its launch, Xura Secure Communications GmbH has managed to build a strong market position and today holds a market share of over 30 percent in Germany. With the acquisition of Xura Secure Communications GmbH, the enterprise division of CLX Communications has strengthened its significant presence in Germany “.

Malcolm says the thinking behind the Unwire purchase is similar in that it offers CLX the opportunity to strengthen its position in the Nordic countries, particularly Denmark.

“Unwire is one of the largest A2P SMS companies in the Nordic countries and is particularly strong in Denmark. Most of the SMS world has historically been fragmented, ”he explains.

“There have been local companies in local countries that have traditionally built solid foundations in their home markets. Unwire has built a strong customer base which includes most of the major Scandinavian banks, they have many local contracts with the Danish government. We see an opportunity to acquire these small domestic players with a strong proposition in a particular country. This follows our acquisition of Xura (Germany) last year. If we see a strong company in a local market, we plan to add to our scale, wherever we see an opportunity in a country where we don't have a particularly large presence, and that helps our growth. "

So this consolidation is a trend you expect to see continued in the SMS market? “We see an opportunity to remove some of the fragmentation in the global SMS ecosystem. We continue to benefit from it because we are one of the largest profitable companies ”.

In a market where competition is extremely high, smaller companies often struggle to maintain profitability. This, according to Malcolm, presents an opportunity for the likes of CLX.

“I think [the consolidation] will be pretty quick - I expect from us and our competitors to see around 8-10 acquisitions of major national players per year. This suggests to me that we should see three to five major players emerge operating on a global scale. "

Rob Malcolm
Does this mean we will see more M&A activity from CLX? Malcolm uses the age-old storyline that society is always looking for the right opportunities, but said the key word is "right".

He concludes: “Whether or not we make acquisitions is largely defined by what's out there. When it comes to mergers and acquisitions, you must always make sure that you continue to provide quality service to your customers. You don't want to overwhelm or distract your team from delivering it to customers. For us, we are not only looking for opportunities, but we must work hard to make sure we find a scalable way to integrate these potential acquisitions into our business. But it is quite natural. "

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