[theCricketer]

I'm not too knowledgeable on how these deals work, but figured someone on HN would know:

A quick Google search shows that Twilio's market cap is currently $7.4 billion. Does this $2 billion "all-stock" transaction mean that they are giving away over a quarter of the company to pay for this acquisition? Or how else should I read this?

[nemo44x]

I haven't read the details but not entirely. They will likely dilute their own outstanding shares by adding the required shares needed to acquire the company at that value. This will lower the total ownership as a percentage that each share represents but now every share owns more stuff.

So yes they are creating new shares making every other share worth less but it isn't a direct transfer of existing shares. You'll notice companies get board approval for setting aside a number of theoretical shares they could create if they wanted to for things like this or secondary offerings, etc.

[seanlinehan]

Most likely this will be done by issuing new equity. The press release states that they will exchange Twilio Class A common stock per share of SendGrid common stock. They defined the exchange ratio (that's why the price is ~$2B and not a specific number) and will issue as many shares as they need to based on that ratio:

> 0.485 shares of Twilio Class A common stock per share of SendGrid common stock

Technically, issuing new shares dilutes every existing shareholders' ownership. But, if the market deems this to be an intelligent combination that was valued correctly, the market cap of the combined company should be ~$9.4B or (ideally) more. So the goal is for existing shareholders to hold, at worst, the same amount of value in dollar terms as before or, at best, hold more value as a result of the acquisition.

[panarky]

SendGrid is up 17% while Twilio is down 3%.

[JangoSteve]

The other commenters gave good answers, but to simplify (in case it helps), the math of what they're saying about issuing new stock, changes the arithmetic from 2 / 7.4 = 27%, to 2 / (7.4 + 2) = 21%.

[drinkzima]

They will be creating stock to fund the purchase, so in essence, yes. The number of shares outstanding will rise by $2B (price) / $76 (Twilio price as of transaction agreement) = ~26M new shares of Twilio to Sendgrid owners.

[kernx16]

They are essentially merging