Akamai completes acquisition of Edgio assets, expands cybersecurity and cloud services

Akamai Technologies, Inc. (NASDAQ: AKAM), a global leader in cybersecurity and cloud computing services, has announced the successful acquisition of select assets from Edgio, following the latter’s Chapter 11 bankruptcy filing. The acquisition was approved by the U.S. Bankruptcy Court for the District of Delaware on November 26, 2024, enabling Akamai to integrate Edgio’s customer contracts tied to content delivery network (CDN) and security services, along with non-exclusive rights to Edgio’s patents. However, the deal excludes Edgio’s personnel, proprietary technology, and network infrastructure.

This acquisition signifies a critical step in Akamai’s growth strategy, reinforcing its position as a trusted provider of cloud computing solutions and security services for businesses worldwide. With this development, Akamai is poised to extend its reach, enhance profitability, and provide seamless migration for hundreds of customers previously reliant on Edgio’s services.

Why Did Akamai Acquire Edgio’s Assets?

Edgio, a provider of content delivery network and security services, filed for Chapter 11 bankruptcy earlier this year, citing financial challenges. The bankruptcy court approved Akamai’s bid during a 363 auction process, allowing Akamai to secure Edgio’s customer contracts and intellectual property assets.

The acquisition aligns with Akamai’s strategy to consolidate its leadership in cybersecurity and cloud services, offering former Edgio customers a dependable alternative as Edgio winds down its operations. By mid-January 2025, Edgio’s content delivery network will cease operations, leaving hundreds of businesses reliant on Akamai for uninterrupted service and advanced security capabilities.

What Does This Mean for Edgio Customers?

For businesses previously using Edgio’s services, the acquisition provides a pathway to Akamai’s industry-leading platform, known for its cloud computing solutions and robust cybersecurity features. Akamai plans to offer smooth transitions, ensuring minimal disruption to business operations or end-user experience.

Adam Karon, Akamai’s Chief Operating Officer, highlighted the company’s readiness to support new customers. He explained that Akamai’s expertise in handling similar acquisitions ensures a seamless migration, with customers gaining access to the company’s content delivery network and advanced security services operating on a global scale.

Financial Impact of the Acquisition

Akamai expects the transaction to contribute between $9 and $11 million in revenue for the fourth quarter of 2024. However, the company also anticipates transition costs of approximately $15–$17 million during this period, resulting in a temporary reduction in non-GAAP net income per share by $0.03–$0.05.

Looking ahead to 2025, Akamai forecasts substantial financial gains from the acquisition, with additional revenue estimated at $80–$100 million. Transition costs for the year are projected at $25–$30 million, but non-GAAP net income per share is expected to increase by $0.15–$0.20.

Ed McGowan, Akamai’s Chief Financial Officer, stated that the integration of Edgio’s customer contracts will enhance profitability by leveraging Akamai’s cost-efficient platform. He also pointed to the potential for cross-selling and upselling opportunities, as the expanded customer base gains access to Akamai’s cloud computing services and advanced cybersecurity solutions.

What Are the Broader Implications?

This acquisition reflects Akamai’s ambition to remain at the forefront of the cybersecurity and cloud industries. By integrating Edgio’s customer contracts, Akamai strengthens its market position in the content delivery network space, while also broadening its footprint in global security solutions.

However, the transaction also highlights the challenges of integrating assets from a distressed company. Akamai’s commitment to covering Edgio’s network operational costs during the transition underscores its focus on ensuring customer continuity. By prioritising a seamless migration, Akamai aims to retain customer trust and capitalise on new business opportunities.

For businesses evaluating providers in the cybersecurity and cloud computing sectors, Akamai’s investment in this acquisition underscores its reliability and commitment to innovation. With a growing portfolio of cloud computing solutions and an emphasis on securing enterprise data, Akamai continues to position itself as a leading player in an increasingly competitive market.