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Why Oracle Paid More Than $600 Million for Dyn

Nov 21, 2016

Business software titan Oracle paid somewhere between $600 million and $700 million to acquire Dyn, a source close to the deal told Fortune.

Earlier on Monday, Dan Primack reported that Oracle paid "north of $600 million" for the Manchester, N.H.-based company. Oracle and Dyn announced the deal, without financial details, Monday morning.

Dyn raised under $100 million in funding, making the $600 million low-end estimate a good haul. But Oracle (orcl) was not the only suitor circling Dyn, which has an outsized presence in making sure thousands of web sites remain accessible. IBM (ibm) was also interested, according to the source who requested anonymity because he is not authorized to speak about the purchase.

Oracle and IBM declined comment. Dyn has not responded to a request for comment.

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Dyn offers what are called domain name system (DNS) services. That's geek speak for what is basically a high-tech directory that ensures that when a user clicks on an Internet address, say www.Fortune.com, he or she gets routed through to the more arcane numbered address of the servers that run that site.

Oracle's acquisition was finalized weeks ago, before the well publicized distributed denial of service (DDOS) attack that overwhelmed Dyn's systems in late October. That attack, which involved millions of Internet-connected devices deluging Dyn's servers, made it impossible for users in big chunks of the country to access Twitter (twtr), Netflix (nflx), Zendesk (zen), Github (github), and other popular and corporate web sites for hours.

Big public cloud players like Amazon (amzn)Web Services (amzn), Microsoft (msft), Google (googl), and Rackspace offer their own DNS services, but much of the rest of the world, including many Fortune 500 companies, relies on providers like Dyn, Cloudflare, and Verisign for these services.

"Big cloud companies that want to compete with Amazon but don't want to build their own DNS services were all looking at Dyn," said Fortune's source.

Given that Dyn is now taken, it's safe to assume that its rivals are under the microscope now.

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