This afternoon, Intuit confirmed persistent rumors that it was in the process of buying MailChimp, detailing a $ 12 billion transaction that will bring the notorious email infrastructure company into its remit.
Intuit is not a well-known player in the field of email marketing. The company is best known for its TurboTax software – and the associated US government lobbying to ensure its rent seeking continues – its recent purchase of CreditKarma and its older acquisition of Mint.
The Mailchimp transaction will include both cash and stocks.
The question that is shaking your brain right now is the right thing to ask: Why is Intuit spending 10% of its market cap to buy an email marketing company?
According to a statement, Intuit believes the deal “advances” its “global prosperity and strategy to become an AI-based expert platform.” Normally at this point I would convert the corporate corporate language to something in English, but I’m struggling.
The company had more to say, that its takeover of Mailchimp would allow it “to accelerate two of the [Intuit’s] Major strategic bets previously shared: to become the center of growth for small businesses; and disrupt the middle market for small businesses.
It’s a little more grokkable. Intuit’s Quickbooks service is a well-known product in the small business space. Presumably, Intuit believes it can sell more services to its existing small business clients. It still seems a bit of a stretch, but we’re assuming the egg heads have come to the conclusion that the resulting corporate synergies will more than make up for the sticker shock that the deal includes.
Intuit shares are up 0.15% in after-hours trading, implying a shrug from Wall Street on the deal; given how leaky the deal is about to be done, the suit may have already been incorporated into Intuit’s course of action.
For Atlanta, home of MailChimp’s headquarters, the deal is a victory. MailChimp is a well-known bootstrap company, so if you’ve been looking for confirmation that you can build decacorns outside of Silicon Valley and without the help of venture capitalists, here’s some evidence.