Akamai agrees to purchase Cotendo for $268M

CDN Akamai (Nasdaq: AKAM) has agreed to buy Cotendo for $268 million, a deal that was first rumored to be in the works late last month.

Reports had indicated Akamai was competing with Juniper Networks (Nasdaq: JNPR) and AT&T (NYSE: T) for the company, which has been for sale since Akamai filed suit against it.

The Israel-based startup helps publishers accelerate the performance of their websites and mobile websites, a function that's become more important as web pages have continued to increase in size.

"As we look to accelerate growth across the dynamic landscapes of cloud and mobile optimization, we are excited to be joining forces with Cotendo," said Paul Sagan, president and CEO of Akamai. "Cotendo's technology, partnerships and people are a strong complement to Akamai. Together, we believe there is tremendous opportunity for our combined technologies as enterprises embrace the move to the cloud and seek solutions for an increasingly mobile world."

Akamai will acquire all of the outstanding equity of Cotendo in exchange for a net cash payment of approximately $268 million, after expected purchase price adjustments, plus the assumption of outstanding invested options to purchase Cotendo common stock. The deal is expected to close in the first half of 2012.

Last year, reports said AT&T was in the process of integrating Cotendo's app acceleration and dynamic site acceleration with its network, posting the first challenge to what had been a business of one--Akamai--to this point. The telco said it would charge 50 percent of what Akamai charges and be "extremely happy" with the margin.

AT&T currently has a four-year, $30 million distribution deal with Cotendo, and Juniper took part in an earlier fundraising round. Cotendo has raised just $39 million in three funding rounds from venture capital funds Sequoia Capital, Benchmark Capital and Tenaya Capital, since it was founded in 2008.

Cotendo's technology speeds up websites and--what is likely more importantly to all three suitors--helps accelerate the delivery of streaming video and other dynamic content like real-time communications and e-commerce. Cotendo counts companies like Facebook, Zynga, AOL, Microsoft (Nasdaq:MSFT) and Google (Nasdaq:GOOG) among its customers. It is estimated to be on track for revenues of $50 million this year.

For more:
- see this release
- see this AllThingsDigital article

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