Done Deal – Akamai Buys Rival Cotendo For $268 Million

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Akamai has indeed acquired Cotendo, one of its largest competitors, in a deal valuing the CDN and site acceleration services company at approximately $268 million.

The confirmation comes nearly a month after Israeli business press reported that Akamai was mulling an acquisition of the website and mobile acceleration technology vendor for up to $350 million.

Under the terms of the agreement, Akamai will acquire all of the outstanding equity of Cotendo in exchange for a net cash payment of $268 million, after accounting for expected purchase price adjustments, plus the assumption of outstanding unvested options to purchase Cotendo common stock. The transaction is expected to close in the first half of 2012.

Says Paul Sagan, president and CEO of Akamai:

“As we look to accelerate growth across the dynamic landscapes of cloud and mobile optimization, we are excited to be joining forces with Cotendo.

Cotendo’s technology, partnerships and people are a strong complement to Akamai. Together, we believe there is tremendous opportunity for our combined technologies as enterprises embrace the move to the cloud and seek solutions for an increasingly mobile world.”

Founded in 2008, Cotendo is headquartered in Sunnyvale, California, and employs roughly 100 people (of which half work out of its R&D facilities near Netanya, in Israel).

Cotendo has raised over $36 million in funding from investors like Sequoia Capital, Benchmark Capital and Tenaya Capital.

The company specializes in acceleration services for dynamic Web apps, static and dynamic web content, performance monitoring and automatic failover as well as real-time reporting and analytics.

A few months ago, Cotendo raised $17 million in new funding from its previous backers, with Citrix Systems and Juniper Networks stepping in as strategic investors as well. Other strategic partners include Google, AT&T and Sumitomo Corporation.

Cotendo customers include Zynga, Vistaprint and Facebook. Notably, the company’s advisory board includes Jonathan Heiliger, currently VP of Technical Operations at Facebook.

On an interesting sidenote: a year ago, the Massachusetts Institute of Technology joined Akamai in suing Cotendo over patent infringement (which in turn reminds me of Nuance’s recent acquisition of Vlingo, which also occurred after – years of – patent litigation between the two parties).