Akamai Technologies moved to bolster its growing cybersecurity business on Wednesday by acquiring Guardicore, an Israeli firm that fights ransomware attacks, for about $600 million.
Guardicore, which has offices in Tel Aviv and Boston, helps companies monitor what’s happening inside their computer networks to prevent ransomware and other malware programs from spreading and damaging or stealing data. The company, founded in 2013, also offers a program called Infection Monkey that lets companies simulate cyber attacks.
On a call with analysts, Akamai CEO Tom Leighton said his company’s existing security products focus on keeping malware out of customer’s networks, but Guardicore’s products work inside networks to limit damage. “To be secure in today’s world you need a second layer of defense,” he said.
Akamai’s original business of helping distribute online content has grown increasingly competitive, leading the Cambridge-based company to expand into cybersecurity in recent years. For the first half of 2021, Akamai’s revenue from online distribution was unchanged from a year earlier at $1 billion while its security unit’s revenue rose 27 percent to $635 million.
CEO Leighton has been signaling for months that Akamai might pursue acquisitions to add to its security business. “We’re always looking for companies that have novel capabilities that we can use to build products for our customers that are synergistic with our platform,” he told analysts on August 3.
The $600 million Guardicore deal is the most expensive acquisition the company has undertaken since 2000, when it acquired InterVu for $2.8 billion.
On Wednesday, Leighton distinguished the deal from the many smaller acquisitions that Akamai has completed in more recent years.
“I would not call this a tech tuck-in,” he said. “This is the kind of a deal that we do once in a long while when we see an incredible opportunity and a fair price for that opportunity. There’s no cheap security deals for companies that have really good solutions today.”
Guardicore was founded by Pavel Gurvich and Ariel Zeitlin, two veterans of Israel’s cyber defense force, along with former Apple marketing manager Dror Sal’ee. The company’s 300 employees will join Akamai.
The Guardicore deal is expected to be completed in the fourth quarter and add $30 million to $35 million to Akamai’s revenue next year, the company said. But it will also reduce Akamai’s profit margin below 30 percent in 2022.
Shares of Akamai, which had previously gained 1 percent so far this year, were about unchanged on Wednesday.