Akamai (AKAM) Receive Takeover Approach from P/E Firm - Source

October 3, 2022 11:48 AM EDT

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The private equity firm in talks with banks this summer about financing for a potential Akamai (NASDAQ: AKAM) deal has now made an initial approach to the technology company, and the two sides have held talks, according to a source.

While overall private equity takeover activity has slowed given surging interest rates, the tech sector still has seen a steady stream of private equity deals. It is unclear if the private equity firm has secured all the financing needed to mount a formal bid, or if Akamai is open to a sale.

As the backbone of the internet, Akamai has seen solid growth over the last few decades; however, growth is now slowing. Revenue is projected to grow only 4% this year, and EPS is expected to be down 5%. Still, a takeover of Akamai would be a worthy prize for a tech-focused private equity firm, which may be able to strip out costs to increase profits and improve efficiencies to grow revenue faster, especially in web security.

In July, Cowen analyst Michael Elias said Akamai could be worth +$130/share in an LBO. It is unclear if Elias’ LBO takeover projections have been updated since that time.

Akamai has not responded to a request to comment on the rumor.

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