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Google Acquires Apigee a Cloud Software Specialist for $625 million

by Bien R. Gruba III / Sep 11, 2016 12:24 PM EDT
Google announces plans to revamp Hangouts (Photo by Justin Sullivan Getty Images)

Google announced on Thursday that it bought cloud software specialist Apigee Corp. in a deal valued at about $625 million Reuters reported. Google will pay Apigee shareholders $17.40 for each share, a 6.5 percent premium to the stock's Wednesday close.

Google's purchase is the search giant's latest step to dominate the lucrative cloud service business in the same way that it dominated internet search.

Apigee, based in San Jose, California, specializes in managing application programming interfaces, or APIs, the channels through which digital services connect when a company logs a purchase for a customer or places an order with a supplier.

The company's customers include AT&T, Burberry Group Plc, Vodafone Group Plc and the World Bank.

Apigee went public in NASDAQ in April last year at $17 per share.

Analyst Patrick Moorhead of Moor Insights & Strategy speculates that Apigee, with its high-profile clients in strategically important areas can boost Google's chances of closing in on the competition.

According to Reuters, cloud based services are increasingly becoming popular practice for companies as they use internet servers to store, manage and analyze big data because more and more people use their wifi-enabled smartphones to shop, communicate and read.

The service is critical for businesses transitioning to the cloud, Diane Greene, who runs Google's cloud computing division, said to Reuters. "Apigee is a leader in this application programming interface area," she said.

Greene, a former VMware CEO, has pushed to raise Google's profile in corporate computing since she joined last year. During her tenure, Google has streamlined engineering efforts and appointed new leadership for its cloud efforts, improving traction with clients, Google Chief Executive Officer Sundar Pichai said during the company's latest earnings call.

Greene predicts that Apigee would redouble Google's momentum. "Our customer lists are extremely complimentary," she said. "There's some overlap and some areas where we are going to be able to help each other once [the deal] closes."

Reuters said that the Apigee deal comes a day after Google and online storage company Box Inc said they would partner to enable Box's corporate customers to integrate Google's suite of word processing, spreadsheets and other productivity tools, known as Google Docs.

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