Akamai Technologies, Inc. (AKAM Quick QuoteAKAM - Free Report) has completed the acquisition of Noname Security, a top application programming interface (API) security vendor, for approximately $450 million. Announced on May 7, the transaction marks a significant move in the API security landscape and is likely to prove beneficial for the company in the long run.

Transaction Rationale

Noname Security, renowned for its comprehensive API security solutions, will bolster Akamai’s capabilities to meet the escalating demand for robust API protections. APIs are integral to the digital ecosystem, driving functions across various industries such as banking, e-commerce and IoT. Their extensive use makes them prime targets for cyberattacks. Akamai’s data reveals a 109% increase in API attacks year over year, underscoring the urgency for enhanced security measures.

The acquisition will enhance Akamai’s ability to safeguard API traffic across diverse environments and deployments. The deal will leverage Noname’s sales, marketing resources and established alliances, boosting Akamai's reach and impact. The integration aims to create a unified product, Akamai API Security, combining the best of both companies’ technologies.

Industry Perspective

APIs are fundamental to modern business operations, enabling digital transformation and facilitating mobile and IoT adoption. They are pivotal in B2B and B2C interactions, driving the economy at large. However, their widespread use and exposure make them susceptible to sophisticated attacks. The acquisition positions Akamai to address these vulnerabilities more effectively, responding to the growing market need for comprehensive API security solutions.

Web application and API protection (WAAP) platforms, while essential, often lack the depth required to counter all API threats. APIs differ from web applications in their operational logic and exposure, necessitating specialized security measures. Noname’s integration will enhance Akamai’s capabilities in detecting and mitigating these nuanced threats, offering a more robust defense than traditional WAAP solutions.

Significance for Akamai

For Akamai, this acquisition is pivotal in accelerating its growth and reinforcing its position as a leader in the API security domain. The deal aligns with Akamai's strategy to innovate and expand its security offerings, ensuring comprehensive protection for customers’ digital assets. Noname’s expertise will enrich Akamai’s existing API security framework, providing advanced features like machine learning-based threat detection, enhanced visibility of API landscapes and active testing of APIs during development.

The strategic buyout not only addresses current security challenges but also positions Akamai as a pacesetter in the API security industry. The integration process will focus on leveraging Akamai’s vast edge network, enhancing its App & API Protector platform, incorporating advanced threat intelligence and further solidifying its market leadership.

The stock has lost 0.2% over the past year against the industry’s growth of 50.1%.

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Zacks Rank & Stocks to Consider

Akamai currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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