Web content delivery company Akamai Technologies has signed an agreement to acquire web acceleration outfit Netli for approximately $170 million in stock.
In the deal, Akamai would acquire Netli in exchange for about 3.2 million shares of Akamai common stock. The companies expect the deal, which Netli stockholders must approve, to close by the end of this quarter.
The acquisition would improve Akamai's application acceleration offerings, and add to the company's goal of being the leading managed service provider for web application acceleration, Akamai said.
The market for application acceleration spending is projected to grow from $967 million in 2004 to $3.3 billion in 2010, according to IT analysis firm Gartner. Akamai and Netli's combined managed services will focus on two important market segments: application delivery controllers and WAN optimisation controllers, said Akamai.
The merged company will combine Netli's high-performance communications protocol with Akamai's global scale and its capabilities to reroute Internet traffic around points of congestion, Akamai said. The company will target large companies offering dynamic applications such as customer portals, collaboration platforms, e-learning environments and business-to-business commerce.
The two companies "both emphasise leading-edge technology to help businesses deliver more effective, higher performing online applications," Paul Sagan, president and CEO of Akamai, said in a statement.
Netli, based in Mountain View, California, has about 70 employees, and most of them would stay with Akamai, said Jeff Young, an Akamai spokesman.
In November, Akamai announced plans to buy Nine Systems, a multimedia management service provider, in a stock and cash deal worth about $160 million.