Limelight gains large CDN scale with Edgecast acquisition

In a move designed to result in the creation of a globally scaled, edge-enabled software services provider across cloud security and web applications, content delivery and edge video, Limelight Networks has entered into a definitive agreement to acquire Yahoo’s Edgecast.

Providing edge-enabled web applications and content delivery offerings, Edgecast is a business unit of Yahoo, owned by funds managed by affiliates of Apollo and Verizon Communications, and the proposed transaction values the firm at approximately $300m.

Limelight sees the acquisition as giving it the ability to expand scale and strengthen its platform to better deliver blue-chip customer performance, productivity and protection through edge computing offerings. More specifically, Limelight expects the transaction to accelerate its ability to serve its total addressable market (TAM) of approximately $40bn, through expanded capabilities, portfolio targets and new opportunities across over-the-top (OTT) video, cloud security and enterprise secure access, in addition to existing content delivery and web applications services.

On a combined basis, the two companies generated $502m in revenue in 2021. Edgecast generated $285m in revenue in 2021, of which approximately 97% was recurring revenue from a highly complementary customer base with little Limelight overlap, and nearly half coming from high-growth, high-margin products. The combination is expected to more than double Limelight’s annual revenue.

The combined company will have a global network capacity of more than 200 Tbps and more than 300 PoPs, coupled with natively integrated cloud security, edge video platform and web applications. Limelight and Edgecast’s current combined customer base encompasses Fortune 100 clients, as well as some of the world’s leading technology companies, streaming services and most-visited websites. Firms include Amazon, Coach, Disney, First Republic Bank, HBO Max, Hulu, Yahoo, British Telecom, Verizon, Microsoft, Peacock, Sony, TikTok and Twitter.

Assessing the prospects for the combined company, Limelight CEO Bob Lyons suggested that by uniting the firms it was building a powerful application, content and video edge-enabled services company that delivers improved customer performance, productivity and security for the outcome buyer.

“Together we have a strong value proposition to serve the fast-growing yet fragmented edge solutions market, and our combined capabilities will accelerate our ability to capture more share of this high-growth $40bn total TAM,” he said. “In six short months we have taken our TAM from $12bn to $40bn, and with the acquisition of Edgecast, we are further accelerating and solidifying our ability to be recognised as a leader in edge software solutions for the outcome buyer.”

Under the terms of the agreement, Yahoo will initially receive approximately 72.2 million shares of Limelight common stock. The purchase price also includes a $30m investment in the combined company by Apollo and their co-investors, through its ownership of Yahoo.

With support from the Apollo Funds, and alignment with all shareholders, the combined company believes it will be positioned to unlock significant growth opportunities in an attractive sector and capitalise on market trends.

“Ever-increasing consumer demand for faster performance, enhanced security and higher-quality digital content has fundamentally changed how and where companies deliver value online to end users,” said Apollo partner Reed Rayman, who will join the combined company’s board of directors.

“As the market continues to rapidly evolve and expand, the combination of Limelight and Edgecast will have greater strength and scale to capitalise on these trends and better serve its clients. We believe this is a transformative transaction.”

In anticipation of the transaction, Limelight is to rebrand under the name of Edgio, with the combined company continuing to operate under the new brand after the closure of the deal.

Lyons will continue to lead Edgio as CEO after the combination, and its board of directors, which will expand to nine members post-closing, will include three new members appointed by the Apollo Funds.