Limelight becomes Edgio after acquiring Edgecast (Yahoo)

Edgecast (Yahoo), a provider of security and audiovisual content delivery services, has been acquired by Limelight, which will now operate under the name Edgio.

The merger of the two companies will create a global software solutions provider with expected revenues of more than $500 million. Edgio, which will expand its scale and strengthen its platform to deliver “better performance, productivity and protection” to its customers through edge computing solutions, will have a global network capacity of more than 200 Tbps and more than 300 PoPs, and will strengthen its proposition with natively integrated cloud security elements, an edge-based video platform and web applications.

Among the main objectives of the new Edgio are to further deepen the Edge, a total addressable market of “approximately $40 billion”; diversify the revenue mix and strengthen its financial profile, looking to “more than double” Limelight’s annual revenue; or strengthen its web applications, which could bring in $100 million in annual revenue.

Limelight and Edgecast’s current combined customer base includes Fortune 100 clients, as well as technology companies, streaming services and websites such as Amazon, Coach, Disney, First Republic Bank, HBO Max, Hulu, Yahoo, British Telecom, Verizon, Microsoft, Peacock, Sony, TikTok and Twitter.

Details of the deal

Under the terms of the deal, Yahoo will receive approximately 72.2 million shares of Limelight common stock, subject to customary closing adjustments, valuing Edgecast at approximately $300 million based on the 30-day VWAP of $4.12. The purchase price also includes a $30 million investment in the combined company by Apollo and its co-investors, through its stake in Yahoo.

Yahoo may also receive up to 12.7 million additional Limelight shares, representing up to an additional $100 million in consideration, during the period ending on the third anniversary of the closing of the transaction, subject to the achievement of certain share price targets. Following the closing of the transaction, existing Limelight shareholders will own approximately 68.1% of the combined company, or approximately 64.5% assuming Limelight achieves all share price targets under the conditional consideration agreement, while Yahoo will own approximately 31.9% or 35.5%, respectively.

The transaction, which has been unanimously approved by the Board of Directors of both companies, is currently expected to close in the second half of 2022, subject to receipt of regulatory approvals and satisfaction of other customary closing conditions.

Creating a leader

Bob Lyons, CEO of the new Edge and previously head of Limelight, believes that, with this deal, it is building “a powerful application, content and video edge enabled solutions company that delivers improved customer performance, productivity and security for the outcome buyer.”

“Together we have a strong value proposition to serve the fast-growing, yet fragmented edge solutions market and our combined capabilities will accelerate our ability to capture more share of this high growth $40 billion total TAM. In six short months we have taken our TAM from $12 billion to $40 billion and with the acquisition of Edgecast, we are further accelerating and solidifying our ability to be recognized as a leader in edge software solutions for the outcome buyer,” adds Lyon.

At the same time, Jim Lanzone, CEO of Yahoo (which owns Edgecast), expects the new Edgio to become “immediately” the “leader in the massive and growing edge solutions market”.