October 7, 2016

Reports : Verizon may sell data center business to Equinix

Analysts anticipate the deal value to be close to $3.5 billion

Communications service provider, Verizon may sell its data center business to Equinix for about $3.5 billion, according to Cowen & Co. analyst, Colby Synesael.

Colby Synesael said :

We believe a transaction involving Verizon’s co-location assets is imminent and that Equinix is most likely the (acquiring company).

According to reports, Verizon’s data center assets are valuable properties, with its Miami and Culpeper locations being highly desirable. Looking back, Verizon acquired cloud service firm Terremark in 2011 for $1.4 billion and agreed to buy Yahoo in July for $4.8 billion.

According to a Reuters report issued in January, Verizon’s co-location assets include 48 data centers which currently generate earnings of about $275 million.

Synesael added :

Based on our channel checks, we believe the portfolio includes 14 facilities which primarily include those Verizon inherited when it bought Terremark in 2011.

We estimate Equinix 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.

Share this articleShare on FacebookShare on Google+Tweet about this on Twitter