A Bloomberg report yesterday claims that Akamai is working with Morgan Stanley to explore strategic alternatives. On the table, apparently, is a sale of the company. To whom, though?
The move may be in response to pressure from Elliot Management Corp, which holds a 6.5% stake in Akamai and has been pushing the company to consider ways to maximize shareholder value. The thesis is that Akamai's core business is being challenged by big content's moves to bring such capabilities in-house.
Now, it's not the first time Akamai has faced overall trends that threatened to divert revenue away from the middle man, yet the company always seems to come out on top. I don't really believe that this time is different, but just as a theoretical exercise let's consider who might do the buying.
From the network infrastructure side, it would probably take a major network operator like Verizon or AT&T or Comcast or CenturyLink to do such a deal. In particular, Verizon's appetite for Yahoo and other content certainly could fit well with Akamai. If the opportunity were right, I think they might jump at it. But I doubt they'd pay the premium required in this case.
It's a bit more interesting from the content/cloud side of course. Since they are building such infrastructure in-house, it's not such a stretch to think that one of Google, Microsoft, Facebook, Apple, or Amazon could decide to drop $12-15B to instantly scale it. But there are channel conflicts in there that give me pause.
The other option would be for private equity to move in and take the company private. If there is private equity out there that thinks Akamai isn't taking advantage of all the opportunities on its plate and that it could grow faster and more profitably if not tethered to a publicly floated stock, then sure. But again, it's not as if Akamai is hurting for resources to invest.
I still think the most likely thing is for Akamai to continue to forge its own path, as it always does. But I could be wrong. Opinions?