Source of the news: http://www.investors.com/news/technology/verizon-seen-nearing-deal-to-sell-data-centers-to-equinix-for-3-5-bil/
Verizon Communications (VZ) is nearing a sale of its data center business to Equinix (EQIX) for around $3.5 billion, says a Cowen & Co. analyst.
“We believe a transaction involving Verizon’s co-location assets is imminent and that Equinix is the most likely acquirer,” said Cowen analyst Colby Synesael in a research report Wednesday.
A Verizon spokesman declined to comment.
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Verizon acquired cloud service firm Terremark in 2011 for $1.4 billion. Verizon has been selling off noncore assets, including residential phone lines to focus on its wireless business and digital media. Verizon in July agreed to buy Yahoo (YHOO) for $4.8 billion
The Verizon data center assets widely considered to be the most desirable are in Miami and Culpeper, Va., near Washington, D.C. Aside from the Terremark facilities, Verizon also owns some of its own data centers.
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“Based on our channel checks, we believe the portfolio includes 14 facilities which primarily include those Verizon inherited when it bought Terremark in 2011,” Synesael wrote. “We estimate EQIX could pay 13 to 13.5 times EBITDA, or $3.5 billion, and believe such a transaction would be viewed as positive for Equinix and neutral to Verizon.”
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CenturyLink (CTL) the same year acquired another cloud services/data center company, Savvis, for $2.5 billion. CenturyLink also has put its data center operations up for sale. AT&T (T) reportedly is rethinking its strategy and might keep its data center business.
Data center operators such as Equinix provide space, power and cooling. Customers pack the warehouse-size data centers with their own computer servers and other gear. Cloud computing — especially whisking data to mobile devices or PCs — has increased demand for data center space.
Equinix customers include Amazon Web Services, the cloud computing business of Amazon.com (AMZN), and Microsoft (MSFT).
Equinix stock fell 1.2% in the stock market today, to 349.03. Shares touched an all-time high of 391.07 on July 11. Verizon stock fell a fraction Wednesday, to 50.27.
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