Cotendo en route to $300M exit
Israeli developer of unique technology for accelerating Web content expected to be acquired by global content acceleration leader Akamai, Calcalist learns
Akamai, originally an Israeli company as well, leads the content acceleration market which is traded on a $4.7 billion market cap.
Calcalist has also learned that should the deal be signed, Akamai plans to open its first Israeli R&D center. Cotendo was not available for comment, while Akamai said in response: "As a matter of policy, we do not comment on rumors".
Cotendo was founded four years ago by CEO Ronni Zehavi, VP R&D Udi Turgeman and CTO David Drai. Since its inception, the company has managed to raise $39 million in three financing rounds.
Cotendo's main investors are US VC fund Sequoia, Benchmark and Tenaya. Additional shareholders are Japanese Sumitomo Corporation and American media giants Citrix and Juniper which are also Cotendo's strategic distribution partners.
Cotendo has sold its Web acceleration technology (CDN) to technology giants such as Facebook, Microsoft, AT&T and Google. Its Web acceleration suit enables companies to cut server installation costs to obtain the same results.
During the recent year, Cotendo expanded its acceleration technology to mobile application and intranet as well, Calcalist has learned. Last summer, the company became the first to offer Web surfing services for cellular devices.
Last June, the company expanded its business by partnering with enterprise software giant Citrix and in the same round, cemented its grip on the ISP market by partnering with Juniper.
Cotendo reportedly had sales in the millions within a year of inception. CEO Zehavi says the company's 2010 earnings were $5-$10 million, and estimates on the VC market are that Cotendo will end 2011 with earnings totaling $20-$30 million.
A distribution agreement between Cotendo and AT&T secures the company with a $30 million income for the next four years.
Cotendo and Akamai have a history: Only a year ago Akamai slammed Cotendo with a lawsuit for the alleged infringement of three of its hosting and distribution patents, a move that analysts claimed was a precursor to a takeover attempt similarly to Akamai's strategy with its subsidiary Speedera.
If completed, Cotendo's sale will be the second acquisition of an Israel company in the web acceleration market after Limelight acquired Israeli AcceloWeb for an estimated $30 million.
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