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Twilio (NYSE: TWLO) announced its agreement to acquire Segment, a customer data platform for $3.2 billion, its biggest acquisition to date.

In 2018,  Twilio bought SendGrid for $2 billion to add an email to its arsenal of communications tools. During its last fund raising, Segment's valuation was $1.5 billion.

The all-stock transaction is expected to accelerate Twilio's move into customer data management along with its existing API-based tools for building and running communications services.

Segment lets organizations pull customer data from one app into another via APIs. The startup offers a complete toolkit to standardize data collection, unify user records, and route customer data into any system where it is necessary. Over 20,000 companies including Intuit, FOX, Instacart, and Levi’s are using Segment to make real-time decisions, accelerate growth, and deliver compelling user experiences.

Acquiring Segment will accelerate Twilio's growth

Twilio expects to complete its acquisition of Segment in the fourth quarter of 2020. The customer data platform will become a division of Twilio.  The deal will accelerate its growth with a combined total addressable market of $79 billion. It will be a step closer to achieving its goal of becoming the world’s leading customer engagement.

In a statement, Twilio Co-founder and CEO Jeff Lawson said, “Data silos destroy great customer experiences. Segment lets developers and companies break down those silos and build a complete picture of their customer."

Lawson added, "Combined with Twilio's Customer Engagement Platform, we can create more personalized, timely, and impactful engagement across customer service, marketing, analytics, product, and sales. We are thrilled to welcome Segment to the Twilio team.”

On the other hand, Segment’s co-founder and CEO Peter Reinhardt said, "Together, Twilio and Segment have an incredible opportunity to build the customer engagement platform of the future."

Twilio first made its name as a startup in 2008. The company provided an easy way for companies to integrate text and voice services into their apps. Using APIs and a few lines of code, companies could tap into the rapidly expanding world of smartphone and app usage by directly supplying users with in-app tools to communicate preferences and information for customization.

Since then, those basic tools have evolved into a wider range of communications sources such as email and chatbots. These tools are more focused sets of applications aimed at different verticals using them. They supply more tools to enable and better manage customer relations, and also tools to better identify, segment, and work with those customers.

Using acquisitions is Twilio's strategy to expand and build the business into that segment (pun intended) of the tech industry. It is believed that Twilio actually tried to acquire Intercom, a customer relations messaging service, back in 2014 and 2015. But at the time the companies could not agree on a price.

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