Akamai snaps up rival for $2.8bn

Internet acceleration specialist Akamai yesterday agreed to hand over $2.8 billion in stock to buy up streaming media company InterVu. InterVu shareholders will receive roughly 0.6 Akamai shares for each InterVu share they own. Akamai said it would issue 9.3 million common shares to cover the swap. The combined operation -- the deal is expected to be completed sometime next quarter, regulators and shareholders permitting -- will take Akamai's customer tally to 1000, and expand its network of mirrored servers to some 3000 machines around the world, which strengthens its ability to bring customers' content closer to users. It also neatly eliminates one of the company's chief competitors. It's all classic growth-by-acquisition stuff, combing customer and technology bases to bring the combined operation closer to profitability in a way that's more efficient than simply going out and buying more servers. Certainly neither Akamai nor InterVu are both in the red. As of Q3 1999, InterVu has lost $15.7 million during its current fiscal year on sales on $6.6 million. For fiscal 1999, Akamai lost $44.2 million on sales of just under $4 million. Savings made by eliminating duplicate staff and facilities will be ploughed back into expanding Akamai's network, company president Paul Sagan said. He added that the acquisition will grow the company's revenues, but he wouldn't comment on the likely effects of the deal on Akamai's profitability. ® Related Stories Akamai profits plummet despite 206 per cent revenue rise Akamai to launch app delivery service Apple, Cisco invest in Net content delivery service