With Patent Ruling In Their Favor, Limelight In No Rush To Be Acquired

Now that Limelight has prevailed in their patent lawsuit with Akamai, (copy of ruling here) many would think this now clears the way for Limelight to be immediately acquired by one of the major telcos. While I know of at least two telcos who have been interested in the past and made offers to acquire Limelight, those were during very different economic times.

While no one is expecting the market to improve anytime soon to the levels it was in 07', Limelight is not short on cash and does not need to accept a buyout offer just to survive. If anything, I expect Limelight will be the one doing the acquisitions shortly to help shore up some of their ecosystem pieces that tie into content delivery. Limelight can simply wait until they get the right valuation in the market before they agree to any kind of buyout and while that could always come tomorrow, realistically they probably wait until the market improves, their market cap goes up and they get the kind of evaluation they want.

It will also be interesting to hear whether or not Akamai will now make an updated offer to acquire Limelight. While Akamai did make an offer during the trial, from what I was told, Akamai didn't put a high value on Limelight's business and made a low-ball offer, which made sense at the time. But with Limelight winning the patent trial and growing their business nicely over the past eighteen months, clearly Limelight's business is worth a lot more today. I have no indication yet if Akamai will make another offer to acquire Limelight, but I would not be surprised if they do. They have the cash to do it, their stock is at a six month high and they have a track record of acquiring their competition to keep themselves the dominant player in the market.

Comments

[shaun noll]

that would be a serious stretch for AKAM to take them out, especially if LLNW needs $8+ offer to seal the deal. AKAM only has 325M$ in cash and already has 200M$ in converts outstanding, would take quite a bit of AKAM equity to do that. would be one helluva combo though it would seem but i would imagine now a whole lot of friendship between the 2 companies now that they've been in lawsuits for years and the sales guys have been talking smack about each other for years....

thanks for your work dan, great stuff as always.