Akamai today said it has agreed to buy Internet streaming media pioneer Intervu in a stock deal valued at $2.8 billion. With the acquisition, Internet upstart Akamai said it will combine its network offerings with that of Intervu in an effort to quickly expand into the streaming media market.
The news sent Akamai's stock sinking. In morning trading, shares of Akamai shed $15, or about 6 percent, to $220. Meanwhile, Intervu shares rose $4, or about 3 percent, to $121.
Together, Intervu and Akamai will support all streaming media formats and will have more than 1,000 customers in its roster of clients, including big names AOL MovieFone, Apple, CBS, CNN, General Motors, IBM, Microsoft and NBC, the two companies said in a statement.
The companies said together they will be able to offer customers services such as integrated applications that combine the delivery of streaming media with personalized content. They will also combine Intervu's local networks for audio and video and Akamai's global delivery network into a single framework for the delivery of streaming media.
Akamai is one of a handful of new Net firms aiming to eliminate Internet bottlenecks and speed download times. It has placed hundreds of servers inside Internet service provider networks and hosts pieces of its clients' Web sites in this network of cache sites.
More recently, Akamai has been focusing its efforts on bolstering its multimedia offerings, such as streaming services, in order to compete with other larger Web companies that have all been doing the same. Last month, Akamai bought Network24 Communications, a Cupertino, Calif.-based company that produces toolkits and services for creating streaming media Webcasts. It marked Akamai's first outside acquisition.
Through the Intervu deal, Akamai said the companies will jointly have more than 3,000 servers in 100 networks across several countries. The company's headquarters will remain in Cambridge, Mass.; it will also have offices in Atlanta; Chicago; Cupertino, Calif.; Los Angeles; San Diego; San Mateo, Calif.; Seattle; New York and Washington, along with offices overseas in Munich, London and Paris.
Under terms of the deal, Akamai said it will acquire Intervu by issuing approximately 9.3 million shares of its common stock in exchange for all outstanding shares of Intervu stock. Additionally, Akamai will convert outstanding Intervu stock options and warrants into approximately 2.8 million Akamai options and warrants. Each Intervu share will be exchanged for 0.5957 shares of Akamai.
The acquisition is subject to certain closing conditions, regulatory approvals and the approval of Intervu shareholders. The deal is expected to close during the second quarter of this year, the companies said.