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Akamai Shares Soared: What You Need to Know

By Evan Niu, CFA – Updated Apr 6, 2017 at 4:49PM

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Is this meaningful or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of content delivery network specialist Akamai Technologies (Nasdaq: AKAM) are delivering solid gains today, up by 20%, after the company announced it was acquiring smaller competitor Cotendo.

So what: Akamai is picking up the company for $268 million in cash, taking out one of its direct rivals to its lucrative Value Added Services business. The deal has even brought up speculation that Akamai itself could appear to be an attractive acquisition target now.

Now what: Through the deal, Akamai may be picking up a relationship with AT&T (NYSE: T) since Cotendo and Ma Bell have ties. The combined company hopes to "accelerate growth across the dynamic landscapes of cloud and mobile optimization," according to Akamai CEO Paul Sagan. The deal is expected to close during the first half of next year if everything goes according to plan.

Interested in more info on Akamai? Add it to your watchlist by clicking here.

Fool contributor Evan Niu owns shares of AT&T, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

Akamai Technologies Stock Quote
Akamai Technologies
AKAM
$89.02 (-1.01%) $0.91
AT&T Stock Quote
AT&T
T
$19.09 (-0.16%) $0.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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