Akamai pays $900M to acquire AWS cloud infrastructure rival Linode

Content delivery network services provider Akamai Technologies Inc. announced today it has agreed to acquire the infrastructure-as-a-service platform provider Linode LLC for about $900 million.

The acquisition of the Amazon Web Services Inc. rival will help Akamai transform itself into the “world’s most distributed compute platform,” the company said.

News of the acquisition came as Akamai reported its fourth-quarter financial results, with earnings and revenue topping expectations.

Linode was founded way back in 2003 and has positioned itself as an alternative to the big public clouds such as AWS, Microsoft Azure and Google Cloud. Even so, the company has always made it clear it’s not trying to rival those platforms, saying AWS is probably the best fit for larger enterprises.

But for small businesses, it says, larger cloud providers can be unnecessarily complex, lock in customers’ to their cloud and sometimes spring billing surprises on them. Linode says its platform dramatically simplifies the process of running apps in the cloud, with users able to launch a server in seconds and control everything through its easy-to-use application programming interface, command line interface and other tools.

Akamai said it’s acquiring Linode to provide developers with a distributed platform for building, running and securing next-generation applications. It points out that Linode has always made developer-friendly cloud computing capabilities “simple, affordable and accessible.”

Akamai co-founder and Chief Executive Dr. Tom Leighton said the combination of these capabilities with his company’s own edge platform and security tools will be “transformational,” creating a unique platform that will allow developers to build, run and secure applications anywhere they run. “This a big win for developers who will now be able to build their next generation of applications on a platform that delivers unprecedented scale, reach, performance, reliability and security,” he added.

Linode, which has never raised any outside funding in its 18-year history, may seem like a fairly surprising target for an acquisition. However, Linode founder and CEO Christopher Aker justified the decision to sell the firm, saying that customers today face greater challenges as cloud services become more complex, involving compute, storage, security and delivery. “Solving these challenges requires tremendous integration and scale, which Akamai and Linode plan to bring together under one roof,” Aker said.

Akamai said the terms of the deal will see it acquire all of Linode’s outstanding equity when the transaction closes by the end of the first quarter. The deal is expected to add around $100 million in revenue for Akamai by the end of the year.

In its fiscal 2021 fourth quarter, Akamai delivered net income of $160.5 million, with earnings before certain costs such as stock compensation coming to $1.49 per share. Revenue for the period came to $905 million, up 7% from a year ago. That was better than expected, with Wall Street looking for earnings of $1.42 per share on revenue of $896.3 million.

Today’s acquisition of Linode is Akamai’s second big acquisition in recent months, following its $600 million deal in September to acquire Guardicore Ltd., an Israeli startup that sold a microsegmentation platform for securing corporate networks.

Image: Akamai