Akamai buying Prolexic for $370 mln to boost DDoS protection

December 2
12:26 PM 2013

Akamai Technologies Inc said it will spend about $370 million to acquire Prolexic Technologies Inc, a pioneer in fighting distributed denial of service attacks, cyberthreats that cripple networks by overwhelming them with Internet traffic.

The move will bolster Akamai's security offerings, which already include some services for protecting websites against the distributed denial of service (DDoS) attacks.

DDoS attacks are among the most common types of Internet threats. Criminals use them in extortion attempts, hacker activists launch them to make political statements and governments use them in military operations.

High-profile DDoS attacks in recent years include a campaign launched last year against U.S. banks that has been linked to Iran along with ongoing assaults organized by Anonymous, a loosely knit collective of hacker activists.

Akamai said the deal is expected to reduce its adjusted profit by 6-8 cents per share in the first full year after closing. Analysts on average expect Akamai to earn $2.16 per share in 2014, according to Thomson Reuters I/B/E/S.

Akamai CEO Tom Leighton said on a conference call that he expects the deal will boost profits over the long term.

"As we integrate the companies, we are very confident that we can grow and scale the business to drive significant profit growth over the longer term as the business and market opportunity grows," he said.

Prolexic, founded in 2003, says its customers include 10 of the world's biggest banks along with energy firms, gaming sites, government agencies, healthcare companies and retailers.

Its biggest competitors include telecommunications firms, such as AT&T Inc and Verizon Communications Inc. Prolexic's investors include Camden Partners, Trident Capital and Intel Capital.

Akamai's core business is speeding delivery of web content for firms including Apple Inc, Facebook Inc, Netflix Inc, News Corp and Nintendo Co through more than 141,000 servers located around the globe. Over the past few years it has added security products in a bid to expand offerings to existing clients and boost revenue.

Akamai said it expects the acquisition to close in the first half of 2014. 

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