TurboTax maker Intuit Inc has acquired Mailchimp, an email marketing company, for US$12 billion in a cash-and-stock deal. Over a year ago, the two pioneers began discussing forming a partnership, which later evolved into talks about an acquisition.
The acquisition of Atlanta-based Mailchimp, which runs a marketing platform for small and mid-market firms, makes it possible for Intuit to extend its product line for small businesses. Fintech companies such as Intuit are benefiting from small companies’ resurgences from the pandemic’s repercussions. For the fiscal year 2022, the company expects earnings and revenue to be higher than expected.
The question that’s in our heads right now is: Why is Intuit investing 10% of its market capitalization to buy Mailchimp? According to a press release, Intuit believes that the deal “advances” its aim of “powering prosperity around the world” and becoming an AI-driven expert platform.
Co-founders of Mailchimp, Ben Chestnut and Dan Kurzius, own a 50% stake in the company, respectively. Employee bonuses totaling $300 million will be paid out as part of the deal, leaving the remaining $11.7 billion split evenly between cash and Intuit stock for the two co-founders.
In the consequences of the dot-com bubble burst, Mailchimp was founded in 2001. What began as a side project hustle on their internet ventures, which included a web design firm and e-greetings site, has now grown to the point where it has received enough momentum that the duo has now devoted their full attention to it.
Over the years, Chestnut and Kurzius have maintained full ownership of the company, successfully landed on the Forbes 400 list of the wealthiest Americans in 2018. Mailchimp made $600 million in revenue that year and has grown by about $100 million each year since then. It’s expected to hit the $1 billion mark in 2021. Mailchimp now has over 12 million users, including Vimeo Inc and TED, a non-profit media organization.