KDDI Buys Itself a CDN

Japanese telecommunications provider KDDI is becoming a content delivery network. Today they announced their intent to purchase Korean-based CDNetworks, or at least 85.5% of it. The company is taking aim at smoothing internet access for its wireless business, but the CDN business has assets outside of Asia as well that perhaps we ought to see as parallel to the company’s Telehouse subsidiary.

CDNetworks did about $100M in total revenues last year, and has been moving from a pure CDN business toward website acceleration of late. Two years ago, the company bought Panther Express which gave it a greater presence outside of its home turf in Korea and the surrounding region. They are said to have been looking for a buyer for some time now, so the deal isn’t much of a surprise.

KDDI is spending $167M for the 85.5% stake, corresponding to a total valuation for CDNetworks of $195M or thereabouts. Just where they point the company after taking control is an open question. Control of CDNetworks gives KDDI a top-5 position in the global CDN space, leapfrogging all other network operators except perhaps Level 3.  If they wanted to expand that presence, it isn’t that much of a stretch to consider a followup purchase of Limelight Networks (NASDAQ:LLNW, news, filings), is it?

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Categories: Content Distribution · Mergers and Acquisitions