Akamai Technologies, Inc. (AKAM), the leading content distribution network (CDN) will acquire Netli, a competitor that provides application acceleration services, the two companies said today. The deal is subject to shareholder approval, and is expected to close later this quarter. Akamai will acquire all of the outstanding equity of Netli in exchange for approximately 3.2 million shares of Akamai common stock. Akamai shares are currently $55.55, valuing the deal at $177.7 million.
The deal continues the consolidation in the CDN business. In December Level 3 acquired SAVVIS Communications' CDN network for $135 million, while Akamai acquired streaming media specialist Nine Systems for $160 million in November, and Internap paid $217 million in October to buy VitalStream, another streaming media provider.
Application acceleration solutions improve the performance of Web- and other Internet-based applications. According to Gartner, a leading research firm, the market for application acceleration spending is forecasted to grow to $3.3 billion in 2010. By combining Netli's high performance communications protocol with Akamai's massive global scale and unique capabilities to route Internet traffic around points of congestion, Akamai expects to offer businesses the most comprehensive and effective managed services for accelerating applications.
"We are very encouraged by customer acceptance of our application acceleration services, and believe the alignment of Akamai and Netli will provide enterprises with even better solutions going forward in this important and emerging market," said Paul Sagan, president and CEO of Akamai. "Akamai and Netli both emphasize leading-edge technology to help businesses deliver more effective, higher performing online applications, and we are confident that this combination will benefit our customers, employees, and shareholders."
Netli provides network infrastructure as a service, on-demand optimizing application, and content delivery while shifting bandwidth, computing, and storage requirements to Netli infrastructure. The result is better utilization of capital budgets and resources by transferring the cost, risk, complexity, and management overhead of delivering enterprise-scale Web applications and content to Netli.
Netli said its customers include "the world's three biggest mobile phone suppliers, the largest technology reseller, the largest beauty products company, the two largest computer manufacturers, and the top two import auto manufacturers." The company is headquartered in Mountain View, California.
"By joining forces with Akamai to address the large and quickly expanding application acceleration market, we believe our customers will gain access to an even larger global network and a wider portfolio of leading-edge services supported by a combination of the most experienced providers in the industry," said Gary Messiana, CEO of Netli. "Our people are very proud of our pioneering work to deliver proven and effective technology in the area of optimizing online application acceleration, and we look forward to working with Akamai to combine our technology and capabilities to create the strongest managed service offering in the industry."
