Google to Buy API Firm Apigee for $625 Million--2nd Update
September 08 2016 - 1:15PM
Dow Jones News
By Jack Nicas
Alphabet Inc.'s Google is buying software company Apigee Corp.
for roughly $625 million, the latest move to bolster its offerings
to corporate customers.
Google will pay $17.40 a share for Apigee -- a 6.5% premium to
Wednesday's closing price. Apigee shares have more than doubled in
value this year.
Apigee specializes in Application Programming Interfaces, or
APIs -- increasingly important software in modern commerce because
they serve as the conduit for automated communication between
companies' digital systems and their partners and customers.
For example, when a person buys a pair of jeans on a mobile app,
that app typically uses an API to send the sale to the retailer's
computers, which in some cases then use other APIs to connect to
suppliers and shippers. Or, rather than calling a pharmacy to send
a prescription, doctors now can send the order via an app that uses
an API to connect with the pharmacy.
Apigee's customers, which include AT&T Inc., Walgreen Co.,
and Burberry Group PLC, pay Apigee a fraction of a cent every time
they tap the API.
"It is stunning how almost every customer is bringing up (APIs)
when I'm in meetings," said Diane Greene, head of Google's
enterprise-cloud business, in an interview Thursday. She said
companies report big sales increases after turning on APIs.
The acquisition, she said, "further shows that we are so
committed to helping enterprise customers."
Since Google hired Ms. Greene in November, it has been
bolstering its pitch to companies to effectively store and run
their digital businesses on Google servers with Google services.
The search giant is betting this so-called enterprise-cloud
business can be a major revenue driver over the next several years
-- helping to diversify its business from advertising -- though
Google trails rivals Amazon.com Inc. and Microsoft Corp. in that
arena.
Apigee recorded revenue of $66.9 million for the nine months
ended April 30, an increase of 34% from the year-earlier period. It
posted a $32 million loss. At the time, Apigee said it had more
than 300 customers, an increase of 114 customers since the end of
the quarter ending in April of 2015.
--Tess Stynes contributed to this article.
Write to Jack Nicas at jack.nicas@wsj.com
(END) Dow Jones Newswires
September 08, 2016 13:00 ET (17:00 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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