RealTime IT News

Akamai to Purchase Rival Speedera

Content delivery network Akamai Technologies inked a deal Wednesday to acquire its archrival Speedera Networks.

The pact includes shelling out 12 million shares of Akamai common stock (worth an estimated $130 million) for Santa Clara, Calif.-based Speedera, as well as its backbone network of more than 1,000 service centers and its India-based wholly owned subsidiary.

Speedera's shareholders and U.S. regulators still need to review and approve the deal. Akamai president and CEO-elect Paul Sagan said if all goes well, the paperwork should be finalized by the end of the second quarter of this year.

"This acquisition fits our growth strategy to expand our outsourced content and delivery business," Sagan said during a conference call with press and analysts. "We've always said that our primary competitor is the in-house solutions followed by large outsourced managed service providers. Speedera has some offerings in the area of reporting and customer portals that we do not have. There is some customer overlap but nothing significant."

The combined company would compete with similar distributed on-demand computing offerings from Kontiki and Mirror Image Internet, as well as large outsourced managed service providers like AT&T and Savvis .

While most of Speedera's financial information is being kept under wraps, Akamai CFO Bob Cobuzzi said Speedera's latest financial paperwork show it as a company with $8.3 million in revenues and marquee customers such as AMD, DoubleClick, FOX Broadcasting, McAfee, NASA and Macromedia.

CEO Ajit Gupta, chief architect Rich Day, and CTO Eric Swildens founded Speedera in 1999. Gupta will be working directly with Sagan in an advisor role, as well as heading up part of the transition team.

The all-stock deal would also erase a long history of legal battles between the two companies, including their current trade secret fight in California and an upcoming patent infringement suit scheduled for this fall in Massachusetts.

"I would think it was better to settle these differences in a business manner than in the courts," Sagan said. "Court battles can be long and drawn out and a lot of damage could have been done in the meantime."

Cambridge, Mass.-based Akamai runs a network of more than 14,000 servers in more than 65 countries. The company's specialties include analyzing and managing Web traffic, transmitting content from the server geographically closest to the end user. It also offers audio and video streaming services, business intelligence and content targeting applications and pay-as-you-go extra capacity on demand to avoid network congestion during periodic spikes in traffic through a partnership with IBM .