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 infra company to its corporate remit.
Intuit is not a well-known player in the email marketing space. The company is instead best known for its TurboTax software — and associated lobbying of the US government to ensure its rent-seeking can continue — its recent purchase of CreditKarma, and its more dated acquisition of Mint.
The Mailchimp transaction will comprised both cash and stock.
The question rattling around your brain at the moment is the correct thing to ask: Why is Intuit spending 10% of its market capitalization to buy an email marketing company?
Per a release, Intuit thinks that the deal “advances” its “powering prosperity around the world, and its strategy to become an AI-driven expert platform.” Normally at this juncture I’d convert the company’s corporate-speak to something in English, but I’m struggling.
The company had more to say, that its Mailchimp buy 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 reckons that it can sell more services to its existing small business customers. It still feels like a bit of a stretch, but we presume that the eggheads have come to the conclusion that ensuing corporate synergies will more than compensate for the sticker-shock that the deal includes.
Shares of Intuit are up a slim 0.15% in after-hours trading, implying something of a shrug from Wall Street concerning the transaction; given how well-leaked the deal was on its way to consummation, the combination may have already been priced into Intuit’s share price.
For Atlanta, where MailChimp is headquartered, the deal is a win. MailChimp is a famously bootstrapped company, so if you were looking for confirmation that you can build decacorns outside of Silicon Valley and without venture capital help, here’s evidence.