Shares of Akamai closed at $31.63 yesterday. Its stock price has been volatile this year amid growing competition, and shares are down 33 percent for the year.
“The stock is still way off its historic highs, and they’ve removed a competitor who was putting price pressure on their highest margin products,’’ said Jim Davis , senior analyst at 451 Research in San Francisco.
Cotendo, a Sunnyvale, Calif., company with 100 employees that launched in 2008, was often able to beat Akamai on price, he said. “Having somebody come in and undercut you is not really good for your business model,’’ Davis said.
In a statement yesterday, Cotendo chief executive Ronni Zehavi said the Akamai acquisition would “create the strongest offering in the industry.’’
Paul Sagan, Akamai chief executive, said: “Cotendo’s technology, partnerships, and people are a strong complement to Akamai.’’
The sale will end pending litigation between the two companies.
In the past, an Akamai strategy has been to neutralize competitors by purchasing them, said Melanie Posey, an analyst at IDC Research, headquartered in Framingham. “Cotendo has only been around for a couple of years and has made a big splash in the market.’’
Akamai also had patent suit against Speedera Networks Inc. before buying that Santa Clara, Calif., company for $130 million in 2005.
Akamai has bought 10 companies since it was founded in 1998. The latest deal is its second largest since it bought InterVU Inc. in 2000, which was a stock-for-stock transaction estimated at the time to be worth $2.8 billion.
The deal with Cotendo, which has an office in Israel, gives Akamai a broader global reach. The company, which has 2,300 employees, has more than 100,000 computer servers and is responsible for managing up to 30 percent of the Web’s traffic.
