Google will buy Apigee to give it more reach with APIs

September 8, 2016 12:35 PM

(Bloomberg)—Google is buying software development toolmaker Apigee Corp. for $625 million, the latest move by the search giant to bulk up its cloud-based offerings for businesses.

Alphabet Inc.’s Google has agreed to pay $17.40 a share in cash, San Jose, Calif.-based Apigee said in a statement Thursday. That’s a 6.5% premium to Apigee’s closing price Wednesday. The companies expect the deal to be completed by the end of the year.

Apigee sells a platform that aids companies in managing their APIs, which are programming tools that help developers build software that talks to each other and shares information without revealing the underlying code. APIs have become an integral part of cloud software development, allowing one application to pull data and use services from multiple other programs.

“The addition of Apigee’s API solutions to Google cloud will accelerate our customers’ move to supporting their businesses with high quality digital interactions,” Diane Greene, senior vice president of Google’s cloud business, said in a blog post, referring to application program interface products.

Apigee counts among its customers Walgreens Boots Alliance Inc., AT&T Inc., Live Nation Entertainment Inc. and Burberry Group PLC. Walgreens uses Apigee to offer APIs and analyze how the tools are being used. Developers, for instance, can easily incorporate a feature into their apps that allows users to print photos at any Walgreens store, Greene said. Walgreen Co. is No. 37 in the Internet Retailer 2016 Top 500 Guide; Burberry is No. 356.

Google has been working on bulking up its enterprise-focused products, having lagged behind Inc. (No. 1 in the Top 500) and Microsoft Corp. (No. 88) in selling its public cloud computing software to companies. Greene joined Google late last year to lead the effort and has focused on broadening Google’s tool set to attract less technically savvy customers. The Apigee acquisition will also help support Google’s own set of APIs, which include ones that allow developers to pull information from YouTube as well as the Translate and Maps software to imbed in their own apps.

“They’re looking for assets to build out their cloud business,” said James Cordwell, an analyst at Atlantic Equities. “Clearly this fits into that area and they are looking for specific niches where they can really differentiate themselves.”

“API management is a consolidating space, with Oracle, ChannelAdvisor, and IBM each acquiring leaders, while Apigee is one of the remaining ‘pure-plays’ in the market,” writes R.W. Baird & Co. senior analyst Colin Sebastian. “Coinciding with the rise of web applications and then fueled more recently by mobile apps, big data, and Internet of Things (IoT), APIs are growing at an exponential pace and driving the need for management solutions, such as Apigee,” he writes.

Google was little changed at $802.42. The shares were up 3.9% this year through Wednesday. Apigee jumped 6.7% to $17.44. Lazard Ltd. was financial adviser to Google in the deal.




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