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This morning, Limelight Networks (NASDAQ:LLNW) announced an agreement to acquire privately held EyeWonder in a cash and stock deal valued at $110M. The deal is expected to close sometime in the first half of next year. After DoubleClick (DCLK) and maybe Pointroll, EyeWonder is one of the largest rich-media ad platforms in the space, billing about $35-$40M in revenue for this year. With Limelight's 2009 projected revenue of $140-$150M, this deal should easily make the combined companies into a $200M+ organization in 2010.

For Limelight, this is a smart move and the immediate affect is twofold. It increases the company's revenue by a third and more importantly, it is acquiring a company that has 70%+ margins on its business. EyeWonder's overhead is low since it is not in the infrastructure business and this will allow Limelight to diversify its revenue with a product line that's not competing solely on price, like we have seen in the CDN space for so long.

I am already hearing some say that the combined EyeWonder and Limelight ad solution will compete with Akamai's (NASDAQ:AKAM) advertising solution, which is not the case. Akamai acquired acerno to get into the behavioral targeting business. EyeWonder is a platform that allows for rich-media ads on the web and within video games. Two very different ad solutions, solving two very different problems for content publishers.

Of the $110M in purchase price for this deal, Limelight is paying for $62M of it in cash. This leaves Limelight with about $100M left in the bank and I would not be surprised if we saw them make a few more smaller acquisitions in the near term.

Disclosure: No position

Source: Limelight Networks to Acquire EyeWonder, $200M in Combined Revenue Next Year