Verizon Bids $1.4 Billion in Cloud Play for Terremark

Deal expected to catalyze Verizon’s “Everything-as-a-Service” strategy. Terremark will operate as wholly-owned subsidiary, retain name and current management.

January 31, 2011
By

D.H. Kass

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Verizon Communications Inc. said it will pay $1.4 billion, or $19 per share in cash, for Terremark Worldwide Inc., a $350 million, Miami, FL-based provider of managed IT infrastructure and cloud services.

Verizon said that it will initiate an offer for all of Terremark’s common shares between February 10, 2011 and February 17, 2010. The deal, which has been approved by the board of directors of both companies, is subject to the approval of Terremark’s shareholders. Verizon said that it expects to complete the deal by the end of March, 2011.

Verizon said that it has already secured the consent of three Terremark stockholders representing nearly 28 percent of the company’s outstanding shares.

The communication giant’s $19 per share offer amounted to a 35 percent premium above Terremarks’s closing stock price of $14.05 on Thursday when the deal was announced. Terremark’s shares spiked to $18.92 on Friday and since mid-August, 2010, its stock price has climbed nearly 150 percent.

Officials said that Terremark will operate as a wholly-owned subsidiary, retaining the company’s name and current management team.

The two companies have an existing relationship. Last June, Verizon leased some 25,000 square foot of space in Terremark’s Miami and Culpepper, Virginia data centers, moving to meet the data center services requirements of its government clients and possibly seeding the beginnings of this deal.

Verizon said that the deal will add fuel to its “everything-as-a-service” cloud computing strategy gained from offering a unified enterprise IT platform and leveraging Terremark’s business cloud solutions and its substantial roster of clients in the commercial and public sectors.

“Cloud computing continues to fundamentally alter the way enterprises procure, deploy and manage IT resources, and this combination helps create a tipping point for ‘everything-as-a-service,’” said Lowell McAdam, Verizon president and chief operating officer.

“Our collective vision will foster innovation, enhance business processes and dynamically deliver business intelligence and collaboration services to anyone, anywhere and on any device,” he said.

With the acquisition, Verizon now commands Terremark’s fleet of 12 data centers, including its flagship Network Access Point (NAP) facility in Miami, and NAP centers in Virginia; Santa Clara, CA; Madrid, Spain; Bogota, Colombia; Amsterdam; Istanbul, Turkey; and Sao Paulo, Brazil. In addition the company operates a data center in Dallas, TX and hosting centers in London and Brussels.

“This agreement represents an exciting opportunity to accelerate our strategy and serve our enterprise and government customers with even greater innovation on a global scale with Verizon’s resources and extensive reach,” said Manuel D. Medina, Terremark chairman and chief executive.

“We will continue to work with leading hardware, software, systems integrator and carrier partners to build on our unique business model,” he said.

TAGS: cloud computing,Verizon,IT infrastructure,data centers,Terremark



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