Verizon-run Yahoo (VZ) to sell Edgecast to Limelight
In order to tap into the immense growth potential of the cutting-edge solutions market and develop a powerful content business with a global scale of operations, Yahoo has decided to divest Edgecast Inc. for Limelight Networks, Inc. LLNW in an all-stock transaction. The transaction is expected to close in the second half of the year, subject to mandatory closing conditions and regulatory approvals.
Edgecast is a business unit of Yahoo, which is owned by funds managed by Apollo Global Management, Inc. APO and Verizon Communications Inc. Vz. It is a leading provider of industry-leading security, content delivery and video streaming services, with a dedicated team of domain experts. After the divestiture, Yahoo will receive approximately 72.2 million Limelight shares and will own approximately 31.9% of the combined company.
In May 2021, Verizon divested Verizon Media’s assets, which included iconic brands such as Yahoo and AOL, as well as leading ad tech and media platform companies, to Apollo Global to better focus on its business. main wireless. Verizon retained a 10% stake in Yahoo after the deal. Apollo Global has renamed the content delivery network unit to Edgecast – the name it was known by before Verizon acquired it in 2013.
After the acquisition, Limelight aims to rebrand the combined company as Edgio. With a total addressable market of approximately $40 billion, Edgio has the potential to provide significantly increased scale and a diverse revenue mix. The buyout is expected to more than double Limelight’s annual revenue, with Edgecast accounting for $285 million of combined revenue of $502 million in 2021.
Additionally, Limelight’s web applications will be significantly enhanced by Edgecast’s multi-layered cloud security platform, providing robust protection and improving developer productivity and ability to improve the performance of digital assets. The transaction is expected to generate $50 million in annual cost synergies from reduced colocation and Internet peering expenses, as well as lower operating expenses.
Going forward, with the support of additional funds and investments from Apollo and Verizon, Edgio is likely to unlock significant growth opportunities and deliver added value to its shareholders.
With one of the most efficient wireless networks in the United States, Verizon is deploying the latest advanced 4G LTE technologies to deliver faster peak data speeds and capacity to customers through customer-centric planning, disciplined engineering and constant strategic investments. The company remains focused on the necessary capital expenditures due to the expansion of 5G mmWave in new and existing markets, the densification of the 4G LTE wireless network to meet the huge traffic demands in several vertical markets and the continuous deployment of fiber infrastructure.
The stock has lost 2.7% over the past year compared to the industry’s 9.3% decline. Nonetheless, we remain impressed with the inherent growth potential of this Zacks Rank #3 (Hold) title.
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A top-ranked stock in the entire industry is Clearfield, Inc. CLFD, sporting a Zacks Rank #1 (Strong Buy). You can see the full list of today’s Zacks #1 Rank stocks here.
Clearfield has posted a surprise profit of 50.7%, on average, over the past four quarters. Current-year earnings estimates for the stock are up 102.7% since March 2021. Over the past year, Clearfield has gained a solid 77.7%.
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