Akamai doubles down on security with $370m acquisition of Prolexic

Contact: Scott Denne

Akamai Technologies reaches for Prolexic Technologies in a $370m all-cash deal that’s a departure from the acquirer’s typical profile. Not only is it Akamai’s largest purchase to date, but Prolexic, a security vendor, doesn’t directly add new capabilities to the company’s core CDN offering.

That’s not to say the transaction isn’t complementary. Prolexic brings Akamai a platform it can use to offer security services – something that could help defend against the downward pricing pressure faced by CDN providers. Also, Prolexic focuses on defending datacenters against denial-of-service (DOS) attacks and has enterprise networking clients – an area where Akamai is trying to expand further and was the focus of its pickup of Velocius Networks, its only other acquisition this year.

From another view, the deal is similar to Akamai’s past M&A strategy of snagging competitors before they can do too much damage. This was the case with its $268m acquisition of Cotendo, which it bought during a contentious patent battle. At about $50m in projected revenue this year, Prolexic is about the same size as Akamai’s own security business, which, like Prolexic, focuses on DOS attacks. We’ll have a longer report on this transaction in tomorrow’s 451 Market Insight.

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