What happened
Shares of Limelight Networks (EGIO -9.23%), a content delivery services company, were spiking today after the company announced that it will buy Yahoo!'s Edgecast company -- which includes edge security, content delivery, and video services -- in an all-stock transaction.
The deal will expand Limelight's total addressable market and will also result in the company changing its name. The tech stock rose on the news and was up by 12.7% as of 12:27 p.m. ET.
So what
Limelight said today that it will purchase Yahoo!'s Edgecast for 72.2 million shares of Limelight common stock, which will give Yahoo! 32% ownership of the combined company when the deal closes.
Image source: Getty Images.
Limelight said in a press release that "the combination will create a globally scaled, edge enabled software solutions provider" with pro forma 2021 revenue of more than $500 million.
Additionally, Limelight said that it will change its name to Edgio while the transaction is closing and that the combined company will use that name once the deal is finalized.
The deal has already been unanimously accepted by the boards of both Yahoo! and Limelight and is expected to close in the second half of 2022. Limelight's CEO, Bob Lyons, will lead the rebranded Edgio company.
Now what
Considering Limelight's share price spike today, investors are clearly on board with this move. They're likely taking notice of the fact that Limelight's management said that the company's total addressable market will be $40 billion once the deal closes.
Management said Limelight has taken its total addressable market from $12 billion to $40 billion in just six months and that with the acquisition of Edgecast, it is "further accelerating and solidifying our ability to be recognized as a leader in edge software solutions for the outcome buyer."
Investors appear to agree, and they're sending Limelight's stock soaring today as a result.
