At first glance, Akamai’s announcement with Elliott Management on Thursday might seem like they are holding hands and singing “Kumbaya.”
But the game is not over for the activist investor’s involvement at the Cambridge tech firm. In fact, it’s just beginning.
Paul Singer’s hedge fund firm acquired a 6.5 percent stake in Akamai late last year. In short order, Akamai hired Morgan Stanley to put itself on the market. Yes, Akamai and Elliott have reached some common ground. But the “For Sale” sign isn’t coming down anytime soon.
Alongside more stock repurchases, Akamai agreed to get more efficient by pursuing a 30 percent operating margin by 2020. (This could have ramifications for many of its 7,600 employees.) Akamai is also adding two board members, a move that might make it easier for Elliott to position the company for a sale.
One new director is Tom Killalea, a former Amazon exec with 16 years there. Amazon, of course, is a rival and a logical potential buyer. Other possible acquirers could include Cisco or a telecom giant like Verizon.
CEO Tom Leighton and his team built something valuable at Akamai: a global server network that can speed up and secure Internet traffic. This could be quite a prize for the right buyer, though it won’t be cheap. Akamai is worth nearly $13 billion today, based on its market cap, and any acquirer may need to pay a premium above that.
Elliott appears to be hedging its bets with parallel strategies — a longer-term path to higher profits, and a shorter route to a possible sale. For now, Akamai is one of the region’s most prominent independent tech firms. But how much longer that independence lasts remains an open question.Jon Chesto can be reached at email@example.com and on Twitter @jonchesto.