Akamai Writes $30M-$40M Check for Verivue: Source

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Akamai Technologies is paying between $30 million and $40 million in cash for cable-backed CDN software vendor Verivue, according to an industry source familiar with the deal (see Akamai to Acquire CDN Software Vendor Verivue).

In addition, Verivue has “earnout” provisions under the deal that could deliver roughly an equivalent amount to that, if it hits certain performance targets, the source said. Verivue CEO Jim Dolce must remain for 18 months to be eligible for earnouts, this source added.

Akamai declined to comment, except to reiterate that the cash transaction is not material and that the deal is expected to close by end of 2012. “We will aim to disclose more details after the deal closes,” spokesman Jeff Young said.

In any case, it would appear to be a disappointing exit for Verivue. The 60-employee company, which Dolce founded in 2007, had raised at least $85 million in funding from Comcast, Arris and others (and may have topped $100 million, according to the source). More broadly, it points to the risks of investing in cable tech startups.

Then again, if Verivue had not acquired the CDN technology from CoBlitz in 2010, it may not have had much of anything to shop around from its original high-scale, distributed VOD product portfolio.

For Akamai, which plans to combine Verivue’s CDN offering with its own “Aura” CDN solution, the question is whether it can successfully make a technology sale to big cable operators and telcos -- given that network providers, in building out their own CDN services, see Akamai as a potential competitor.

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