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December 03, 2013

Akamai Stands to Benefit from Prolexic Acquisition

Akamai’s (News - Alert) plan to acquire Prolexic for some $370 million should not come as a surprise to the tech sector.

The deal provides many benefits to current customers and Akamai’s financial position. For instance, it will lead to a single source for multiple security offerings among enterprises and data centers – which are seeing increased need for IT protection, especially when it comes to distributed denial of service (DDoS) attacks.

Prolexic provides cloud-based security software which protects against DDoS attacks targeting data centers or made against enterprise applications.

“By acquiring Prolexic, Akamai intends to provide customers with a comprehensive portfolio of security solutions designed to defend an enterprise's Web and IP infrastructure against application-layer, network-layer and data center attacks delivered via the Internet,” the companies added in a combined statement.

The deal can also be seen in light of the fact that DDoS is among the most common of all cyber-attacks. In fact, Prolexic estimated earlier this year that hackers launch more than 7,000 DDoS attacks daily. There were recent reports too that increases are being seen in average DDoS attack bandwidth and packet-per-second rates.

Akamai, like Prolexic, protects against DDoS attacks, but they didn’t cover non-web applications – instead being limited to protecting “websites and web applications against DDoS attacks as well as more nefarious application attacks,” Tom Leighton, CEO of Akamai, explained in conference call held earlier this week.

The deal still needs to be approved by regulators, and is expected to be made final in the first half of next year.

Meanwhile, officials at both companies see it as a very positive move. "By joining forces with Prolexic, we intend to combine Akamai's leading security and performance platform with Prolexic's highly-regarded DDoS mitigation solutions for data center and enterprise applications protection,” Leighton said in a statement. “We believe that Prolexic's solutions and team will help us achieve our goal of making the Internet fast, reliable, and secure."

Customers will find it easier to get services offered by the combined company, too. In fact, Scott Hammack, CEO of Prolexic, said that, "Being able to rely on one provider for Internet performance and security greatly simplifies resolution of network availability issues and offers clients clear lines of accountability. We believe that, together, we will be able to deliver an unprecedented level of network visibility and protection."

In addition, under the deal customers will get access to a single suite of solutions that can work with different carriers and maybe even respond to threats before traffic gets to the carrier, the company added in the statement.

As an added benefit, Akamai will have access to Prolexic’s current clients. They include ten large banks, e-Commerce firms, Software as a Service companies, payment processing businesses, travel/hospitality firms and gaming companies.

Also, the deal comes shortly after last year’s announcement that Akamai wanted to expand by making more acquisitions in the security and network fields, according to a 2012 report from Bloomberg News. “Security and networking … are really the growth areas for Akamai,” Willie Tejada, senior vice president and general manager of the company’s enterprise cloud unit, told Bloomberg (News - Alert) last year.

The recent deal with Prolexic may increase Akamai’s revenue, too. Last year, Tejada said the company wanted to add about $100 million in sales each year from new businesses by 2015.

Overall, the deal appears to be a wise one for Akamai. Similar acquisitions could soon follow.

Edited by Cassandra Tucker

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