Akamai in talks to buy Cotendo for $300-350m

The US web application acceleration and performance management company is negotiating to acquire its Israeli competitor.

Cotendo Ltd. is in advanced talks to be acquired by Akamai Technologies Inc. (Nasdaq: AKAM) for $300-350 million. The Israeli website and mobile site acceleration solutions developer is in talks with its much larger US competitor Akamai.

Cotendo CEO Ronni Zehavi, VP R&D Udi Turgeman, and CTO David Drai, all former executives at Commtouch Software Ltd. (Nasdaq: CTCH; TASE: CTCH), founded the company in 2008. The company is headquartered in Silicon Valley and has offices in Kfar Netter near Netanya, in Israel.

Cotendo's customers include tier-1 telecommunications vendors, e-commerce sites, social networks, and advertising networks. The company has raised $39 million from Benchmark Capital, Sequoia Capital, and Tenaya Capital.

Akamai is a global leader in web application acceleration and performance management and has annual revenue of $1 billion. Founded 12 years ago, Akamai controls 90% of the content management and streaming market with Cotendo and another competitor controlling the remaining 10%.

In June after raising $17 million Zehavi said that the company was aiming for accelerated growth and had chosen not to look to break even operationally but rather increase expenditure in order to find more customers. He said at the time that the company had, "50 paying customers including Facebook, Zynga, MyYearBook, Conduit, Vistaprint, Bayer Pharmaceuticals and others."

In the past Akamai has sued Cotendo for violating its patents although Zehavi has said, "We will not be intimidated by these suits and we will not disappear. Akamai is known as a company that is quick to sue other companies."

Published by Globes [online], Israel business news - www.globes-online.com - on November 27, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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