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Akamai, Juniper Said to Be Contending for Israeli Startup Cotendo

Israeli media having been buzzing in the last day or so about a possible takeover of a startup there called Cotendo. As reports in newspapers there have it, Cotendo is the subject of a bidding battle pitting Juniper Networks and AT&T on one side versus Akamai, over acquisition said to be worth as much as $350 million. As the Israeli publication Globes puts it, this would be one of the most successful exits for an Israeli startup in the last decade.


Cotendo is an Akamai competitor. Its content delivery network uses a network of distributed servers around the world to put content physically close to consumers, and it specializes in speeding up delivery to mobile phones and tablets, which is a lot like the business that Akamai is known for. The thing about Cotendo is that it has a reputation for being both faster at some things than Akamai, and also cheaper.

Akamai has been known to buy competitors. In 2005 it took out Speedera Networks for $130 million after a contentious patent lawsuit between them. Part of the story driving the Akamai takeover chatter is the fact that Akamai sued Cotendo last November. Akamai CFO JD Sherman will be speaking at a Credit Suisse conference in Phoenix on Wednesday. Maybe he’ll shed a little light on the situation.

Meanwhile, analyst Brian Marshall of ISI likes the idea of Juniper acquiring Cotendo in a joint deal with AT&T. Since AT&T is a big Juniper customer, accounting for about 8 percent of sales, and AT&T is also a big Cotendo customer, it would mean good things for Juniper’s relationship with AT&T. If the numbers being reported are correct it would amount to about 10 percent of Juniper’s cash on hand, about $3.4 billion as of the quarter ended Sept. 30. It would be a much bigger deal for Akamai, which had $688 million in combined cash and short term investments as of the same date.
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