The CDN industry has been sailing along in the background for a while, letting 5G and other new technology take the headlines. But yesterday an interesting M&A deal was announced that looks like it will shake things up a bit.
Limelight has announced a deal to acquire Edgecast from Yahoo, which is a unit of Verizon and managed by the Apollo Funds. Verizon originally bought Edgecast in 2013, has it really been that long? Limelight will be paying for the purchase with 72.2M shares of stock valued at approximately $300M, which is roughly as much as Edgecast’s annual revenue. Yahoo will come out of the deal owning 31.9% of the combined company. The deal includes a $30M investment by Apollo and their co-investors, and Yahoo may get another 12.7M shares if certain targets are met later on.
When the transaction is complete, the combined company will have global network capacity of some 200Tbps and a reach of 300 PoPs. Pro forma its revenue will be just over $500M, and the company expects to derive some $50M in run-rate cost synergies. Limelight’s current CEO will stay on to leed the company, while Apollo Funds will appoint three new members to its board.
In anticipation of the deal, Limelight plans to rebrand as Edgio. That no doubt is aimed at reinforcing the shift of delivery infrastructure to edge nodes, something that CDNs were doing long before the edge was cool of course, but which now has become an industry of its own.
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