SCOTTSDALE, Ariz. and
NEW YORK, March 7, 2022 /PRNewswire/ -- Limelight
Networks, Inc. (Nasdaq: LLNW) ("Limelight"), a leading provider of
edge enabled web applications and content delivery solutions, today
announced that it has entered into a definitive agreement to
acquire Yahoo's Edgecast, Inc. ("Edgecast"), a leading provider of
edge security, content delivery and video services, in an all-stock
transaction. The transaction values Edgecast at approximately
$300 million, or about 1x 2021
revenue. Edgecast is a business unit of Yahoo, which is owned by
funds managed by affiliates of Apollo (NYSE: APO) (the "Apollo
Funds") and Verizon Communications (NYSE: VZ). Yahoo will receive
approximately 72.2 million shares of Limelight common stock,
subject to customary closing adjustments, and will own
approximately 31.9% of the combined company at closing.
The combination will create a globally scaled, edge enabled
software solutions provider with pro forma 2021 revenue of more
than $500 million across cloud
security and web applications, content delivery and edge video
platform. In anticipation of the transaction, Limelight will
rebrand as Edgio, with the combined company continuing to operate
as Edgio following close. With global scale, a leading distributed
edge platform and increased focus on security and connectivity,
Edgio will be a leading solutions provider of choice for
outcome-oriented businesses and clients looking to deliver a fast,
secure and frictionless digital experience to end-users.
Compelling Strategic Rationale and Financial
Benefits
- Expands Scale and Strengthens Platform to Better
Deliver Blue-Chip Customer Performance, Productivity and
Protection Through Edge Computing Solutions: The combined
company will be a leading global, edge enabled solutions
provider with a global network capacity of more than 200 Tbps
and more than 300 PoPs coupled with natively integrated
cloud security, edge video platform and web applications to
power the next generation of customer needs. Limelight and
Edgecast's current combined, diversified customer base includes
Fortune 100 clients, as well as some of the world's leading
technology companies, streaming services and most visited websites,
including Amazon, Coach, Disney, First Republic Bank, HBO Max,
Hulu, Yahoo, British Telecom, Verizon, Microsoft, Peacock, Sony,
TikTok and Twitter.
- Accelerates Penetration of High Growth $40 Billion Total Addressable Market
(TAM): The transaction is expected to
accelerate Limelight's ability to serve its total addressable
market of approximately $40 billion, through expanded
capabilities, portfolio targets and new opportunities across OTT
video, cloud security and enterprise secure access, in addition to
existing content delivery and web applications solutions.
- Diversifies Revenue Mix and Strengthens Financial
Profile: On a combined basis, the two companies generated
$502 million in revenue in 2021.
Edgecast generated $285 million in
revenue in 2021, of which approximately 97% was recurring revenue
from a highly complementary customer base with little Limelight
overlap and nearly half coming from high-growth, high-margin
products. The combination is expected to more than double
Limelight's annual revenue, expand gross margin, increase recurring
revenue growth and further diversify revenue among key
clients.
- Creates Robust $100 Million
Web Applications Solution with Expanded Security
Capabilities: Edgecast's multi-layered cloud security platform
will significantly enhance the scale of Limelight's web
applications division with projected revenue of more than
$100 million. These solutions will provide a holistic cloud
platform for web apps and APIs that increase performance of digital
assets, accelerate application usage, provide robust protection and
enhance developer productivity and capability.
- Substantial and Immediately Accretive Cost Synergy
Opportunities: The transaction price of $300 million implies an acquisition multiple of
approximately 1x Edgecast's 2021 revenue. The combined company
expects annual run-rate cost synergies of $50 million including approximately $30-35 million from reduced colocation and
internet peering expense, and approximately $15-20 million of operating expense savings.
Based on the expected revenue and expense synergies, Limelight has
established a long-term strategic target with revenue growth rate
of 20-25%, gross margin of 60%+ and adjusted EBITDA margin of
15-20%.
- Adds Support from Apollo to Position for Growth: With
support from the Apollo Funds, and alignment with all shareholders,
the combined company will be positioned to unlock significant
growth opportunities in an attractive sector and capitalize on
market trends. The all-stock nature of the deal represents a strong
belief by Apollo in the combined company's go-forward strategy and
future as a global leader in edge enabled software solutions.
"By uniting Limelight and Edgecast, we are building a powerful
application, content and video edge enabled solutions company that
delivers improved customer performance, productivity and security
for the outcome buyer," said Bob
Lyons, Chief Executive Officer of Limelight. "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."
"At Yahoo, we are focused on driving value creation for our
business and customers," said Jim
Lanzone, CEO of Yahoo. "By spinning off Edgecast to merge
with Limelight, the new company will immediately become the
leader in the massive and growing edge solutions market. I am
confident in the value and strength of this combined company, and
the growth it will drive for Yahoo, Edgio and Apollo."
With a significant equity investment in the combined company
from its existing ownership of Yahoo, the Apollo Funds are
committed to supporting the growth strategy and innovative vision
for the combined company. In addition, the all-stock nature of the
proposed transaction reflects the Apollo Funds' confidence in
continued momentum in the edge enabled technology revolution and
support of the vision for the combined company to become an edge
computing leader with a scaled solutions platform, deeply
experienced management team and commitment to delivering
performance, connectivity and security to clients and end-users
globally.
"Ever-increasing consumer demand for faster performance,
enhanced security and higher-quality digital content has
fundamentally changed how and where companies deliver value online
to end users," said Apollo Partner Reed
Rayman, who will join the combined company's Board of
Directors. "As the market continues to rapidly evolve and expand,
the combination of Limelight and Edgecast will have greater
strength and scale to capitalize on these trends and better serve
its clients. We believe this is a transformative transaction and
are thrilled to back this management team as shareholders and board
members to support Edgio in its exciting next phase."
Transaction Details
Under the terms of the agreement, Yahoo will initially 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 trailing VWAP of $4.12.
The purchase price also includes a $30
million investment in the combined company by Apollo and
their co-investors, through their ownership of Yahoo. Yahoo can
also receive up to an additional 12.7 million shares of Limelight,
representing up to an additional $100
million in deal consideration, over the period ending on the
third anniversary of the closing of the transaction, subject to the
achievement of certain share-price targets. Upon closing of the
transaction, current Limelight stockholders will own approximately
68.1% of the combined company, or approximately 64.5% under the
assumption that 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 the satisfaction of other customary closing
conditions.
Leadership and Governance
In anticipation of the transaction, Limelight will rebrand as
Edgio, with the combined company continuing to operate as Edgio
following close. Mr. Lyons will continue to lead Edgio as CEO after
the combination, and its Board of Directors, which will expand to
nine members post-closing, will include three new members appointed
by the Apollo Funds. The new Board will be more closely aligned to
Edgio's go-forward strategy and work closely with Mr. Lyons and the
Edgio management team to leverage their combined skills and
experience to enhance shareholder value.
Conference Call
At approximately 8 a.m. ET /
5 a.m. PT today, Limelight will host
a conference call for investors. Interested parties can access the
call by dialing 1 844 200 6205 from the
United States or 1 929 526 1599 internationally, with access
code 871570. The conference call will also be audio cast live from
http://www.limelight.com and a replay will be available following
the call from the Limelight website.
Advisors
Goldman Sachs & Co. LLC is serving as financial advisor to
Limelight, and Goodwin Procter LLP is serving as legal counsel.
Evercore and RBC Capital Markets, LLC are serving as financial
advisors to Edgecast and the Apollo Funds, and Paul, Weiss,
Rifkind, Wharton & Garrison LLP is serving as legal
counsel.
About Limelight
Limelight Networks, Inc. (NASDAQ: LLNW) is an industry-leader in
edge access and content delivery services that provides powerful
tools and a customer-first approach to optimize and deliver digital
experiences at the edge. We are a trusted partner to the world's
biggest brands and serve their global clients with experiences such
as livestream sporting events, global movie launches, video games
or file downloads for new phone apps. Limelight offers one of the
largest, best-optimized private networks coupled with a global team
of industry experts to provide edge services that are fast, secure
and reliable. For more information, visit limelight.com, and follow
us on Twitter, LinkedIn and Facebook.
About Edgecast
Edgecast is a business unit of Yahoo, Inc. designed to help
companies meet the ever-growing expectations of their customers.
Edgecast's leading set of solutions across content delivery, cloud
security and video streaming, combined with a team of
customer-oriented domain experts, streamlines operations and
improves efficiencies, so businesses can redirect their energy into
creating value for their customers —not managing multiple vendors
and workflows.
About Apollo
Apollo is a global, high-growth alternative asset manager. In
our asset management business, we seek to provide our clients
excess return at every point along the risk-reward spectrum from
investment grade to private equity with a focus on three business
strategies: yield, hybrid, and equity. For more than three decades,
our investing expertise across our fully integrated platform has
served the financial return needs of our clients and provided
businesses with innovative capital solutions for growth. Through
Athene, our retirement services business, we specialize in helping
clients achieve financial security by providing a suite of
retirement savings products and acting as a solutions provider to
institutions. Our patient, creative, and knowledgeable approach to
investing aligns our clients, businesses we invest in, our
employees, and the communities we impact, to expand opportunity and
achieve positive outcomes. As of December
31, 2021, Apollo had approximately $498 billion of assets under management. To learn
more, please visit www.apollo.com.
Cautionary Note Regarding Forward-Looking Statements
To the extent any statements made in this communication contain
information that is not historical, these statements are
forward-looking statements within the meaning of Section 27A of the
U.S. Securities Act of 1933, as amended, and Section 21E of the
U.S. Securities Exchange Act of 1934, as amended (collectively,
"forward-looking statements"). Certain statements in this
communication may constitute forward-looking statements, which
reflect the expectations of Limelight's management regarding the
business prospects and opportunities of Limelight and the
transaction. The use of words such as "may," "will," "could,"
"should," "expects," "intends," "plans," "anticipates," "believes,"
"estimates," "predicts," "projects," "seeks," "endeavor,"
"potential," "continue" or the negative of such words or other
similar expressions can be used to identify forward-looking
statements. Limelight's actual results could differ materially from
those stated or implied in forward-looking statements due to a
number of factors including but not limited to risks related to the
satisfaction or waiver of the conditions to closing the proposed
transaction (including the failure to obtain necessary regulatory,
court and Limelight's stockholder approvals) in the anticipated
timeframe or at all, including the possibility that the proposed
transaction does not close; the response of customers, business
partners and competitors to the announcement of the proposed
transaction, and/or potential difficulties in employee retention as
a result of the announcement and pendency of the proposed
transaction; the possibility of significant unexpected transaction
costs; risks associated with the disruption of management's
attention from ongoing business operations due to the proposed
transaction; the company's ability to achieve projected revenue
increase, to realize run-rate cost synergy opportunities and/or
market expansion fail to meet expectations; and unknown liabilities
and the risk of litigation and/or regulatory actions related to the
proposed transaction. Please also refer to the factors discussed
under "Risk Factors" and "Special Note Regarding Forward-looking
Information" in Limelight's Annual Report on Form 10-K for the year
ended December 31, 2021, with the
U.S. Securities Exchange Commission ("SEC"), each as updated by
Limelight's continuous disclosure filings, which are available at
www.sec.gov.
Forward-looking statements involve significant risks and
uncertainties, should not be read as guarantees of future
performance or results, and will not necessarily be accurate
indications of whether or not or the times at or by which such
performance or results will be achieved. All forward-looking
statements herein are qualified in their entirety by its cautionary
statement and are made as of the date of this communication.
Limelight disclaims any obligation to revise or update any such
forward-looking statements or to publicly announce the result of
any revisions to any of the forward-looking statements contained
herein to reflect future results, events or developments, except as
required by law.
Additional Information and Where to Find It
This communication is not intended to and does not constitute an
offer to sell or the solicitation of an offer to subscribe for or
buy or an invitation to purchase or subscribe for any securities or
the solicitation of any vote, consent or approval in any
jurisdiction, nor shall there by any sale, issuance or transfer of
securities in any jurisdiction in contravention of applicable law.
This communication has been prepared in respect of the proposed
transaction involving Limelight and Edgecast pursuant to the terms
of the definitive agreement, and may be deemed to be soliciting
material relating to the transaction. In connection with the
transaction, Limelight will file a proxy statement on Schedule 14A
relating to a special meeting of the stockholders with the SEC.
Additionally, Limelight will file other relevant materials in
connection with the transaction with the SEC. Investors and
securityholders of Limelight are urged to read the proxy statement
and/or consent solicitation documents regarding the transaction and
any other relevant materials carefully in their entirety when they
become available before making any voting or investment decision
with respect to the transaction because they will contain important
information about the transaction and the parties to the definitive
agreement. The definitive proxy statement will be mailed to holders
of Limelight's stock. Stockholders will be able to obtain a copy of
the proxy statement, as well as other filings containing
information about the transaction and the parties to the definitive
agreement made by Limelight with the SEC free of charge on EDGAR at
www.sec.gov, or on Limelight's website at www.limelight.com.
Information contained on, or that may be accessed through, the
websites referenced in this communication is not incorporated into
and does not constitute a part of this communication. We have
included these website addresses only as inactive textual
references and do not intend them to be active links.
Participants in the Solicitation
Limelight and its directors and executive officers may be deemed
to be participants in the solicitation of proxies from the
stockholders of Limelight in respect of the transaction.
Information about Limelight's directors and executive officers is
set forth in the proxy statement for Limelight's 2021 Annual
Meeting of Stockholders, which was filed with the SEC on
April 23, 2021. Investors may obtain
additional information regarding the interest of such participants
by reading the proxy statement regarding the transaction when it
becomes available.
Contacts
Investor Relations
Sameet
Sinha
(646) 337-8909
ir@llnw.com
Primary Press Contact
Joele
Frank
Jon Keehner / Scott Bisang / Erik
Carlson
Joele Frank, Wilkinson Brimmer
Katcher
(212)355-4449
Additional Press Contacts
Limelight
Katherine Webb
kwebb@llnw.com
(919) 323-6190
Yahoo
Allison Butler
allison.butler@yahooinc.com
(202) 669-9887
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SOURCE Limelight Networks