Major Milestone in Globalization Strategy
BEIJING, CHINA / ACCESSWIRE / March 2, 2017 / On the eve of Feb 21, 2017 ChinaNetCenter announced a major asset restructuring plan which proposed a 21.1 billion Japanese Yen (or US$ 190 million) acquisition of 97.82% equity in CDNetworks, a global CDN service provider. ChinaNetCenter is also proceeding with a 70% equity acquisition in CDNVideo, a Russian CDN provider. The third part of the asset restructuring plan is investing a further USD152 million (or RMB1.041 billion) in its Hong Kong subsidiary.
This series of fast-paced overseas acquisitions marks the next critical milestone of the company's globalization strategy, as they significantly strengthen ChinaNetCenter's competitive position in CDN markets in Japan, South Korea, Russia and the rest of the European CDN markets. It is a common belief among industry analysts that with the world-wide acquisition of global CDN companies, ChinaNetCenter will strongly accelerate the time-to-globalization of its businesses.
First Major Acquisition in 8 Years, CDNetworks will significantly accelerate ChinaNetCenter's globalization efforts.
Since the company's listing on the stock exchange in Shenzhen (SHE:300017), ChinaNetCenter has realized exponential organic growth with the continuous and rapid growth of Internet traffic, becoming the market leader in China in the last few years.
Zhou Liping, secretary of ChinaNetCenter's board said that it is the right time for ChinaNetCenter to strategically accelerate its global presence through overseas acquisitions, and CDNetworks will become the best vehicle for enabling this strategy, as both brands will have strong synergy in node resources, customers and R&D.
CDNetworks is a global CDN service provider that has deployed over 180 nodes in 98 cities of 49 countries around the globe. The company has 4.2T in reserve bandwidth and subsidiaries and offices in many countries such as South Korea, Japan, US, China, Great Britain and Singapore. CDNetworks is very competitive in Asia's CDN market, ranking as the leading CDN provider in South Korea and Japan. With over 16 years of experience in CDN technology development and service offering, CDNetworks has gradually built its own strengths in resources, customer base, marketing, R&D and brand. Despite fierce international competition CDNetworks established an international professional management team to provide core competitive capabilities. Now CDNetworks serves more than 1,300 customers, including major brands such as Samsung, Hyundai, The Economist, TEXCO, DELL and Ebay.
CDNVideo LLC is a leading CDN service provider in Russia, and its network covers Russia and CIS countries with more than 30 nodes providing service to over 400 customers. In Russia and CIS countries CDNVideo controls a market share of over 40% in the 3rd-party CDN market, ranking as the largest service provider.
Globalization Strategy's Milestone may fully leverage the benefits of global Internet traffic.
A MicroMarket Monitor report published on PRWeb states that the scale of the global CDN market will increase from USD 3.7034 billion in 2014 to USD 12.1637 billion in 2019 with a CAGR of 26.9%. While the North American CDN market will expand at CAGR 26.3%, the APAC region is growing at a much faster CAGR of 38.2%.
While enjoying the benefits from China's Internet traffic, ChinaNetCenter noticed that the benefits from Internet traffic in emerging APAC markets are just beginning to take shape making this the right timing for these strategic acquisitions with strong presence in the region. In the last two years, ChinaNetCenter has been making a series of commercial investments in the international market to establish presence by setting up subsidiaries in the US, Malaysia, Ireland and India and the deployment of a large number of overseas CDN acceleration nodes. In 2016 the company conducted a private offering to raise RMB3.6 billion in cash, 1.068 billion of which is to be used for implementing overseas CDN projects.
Liwei, chief communication industry analyst of Zhongtai Securities, believes that global Internet traffic will keep expanding, driven by continuously growing Internet users and devices, higher broadband speed and rapid increase of video consumption. By acquiring mature overseas companies, ChinaNetCenter can quickly secure leadership in the global CDN market and continue to benefit from global Internet traffic in the future.