With an activist investor taking public aim at the company, Internap decided today to take the path of least resistance. In an announcement this morning, the company said it is in fact exploring strategic alternatives to maximize shareholder value, and in fact has been since early this year.
Last week, RDG Capital called for a sale process. Led by Russell Glass, a former President of Icahn Associates, the fund laid out the case citing high industry EBITDA multiples and a lagging stock price. Given all the consolidation we've seen in the industry and the interesting customer list Internap boasts, it's actually a bit surprising we haven't seen more rumors along the same lines over the years.
There is a wide variety of potential suitors out there for Internap's mix of colo, cloud, and IP services. Now that Internap is officially thinking about it perhaps we will see some of them step off the sidelines. But because Internap isn't a pure play, I don't think there is a clear front-runner should an auction actually break out. My money would probably be on private equity, if I were going to be betting - which I'm not.
On the other hand, just because strategic alternatives are being considered doesn't mean Internap is desperate (or even particularly interested) to sell, only that circumstances require that they consider it. I wonder whether RDG will raise the stakes with additional pressure to make something happen, or whether this is good enough for now.