Verizon Communications Inc (VZ.N), the No. 1 U.S. wireless carrier, is selling 29 data centers in the United States and Latin America to Equinix Inc (EQIX.O) for $3.6 billion, as the telecom giant focuses on its core business.
The data centers being sold are located in 15 metro areas, including New York, Atlanta, Chicago, Bogota and Sao Paulo.
The sale represents Verizon’s efforts to streamline its business and follows the divestment last year of a chunk of its landline business and a portfolio of wireless towers.
The enterprise telecommunications industry has had to adapt in recent years to corporate customers seeking more sophisticated and cheaper offerings to manage their data.
Verizon, which bought data center company Terremark Worldwide for $1.4 billion in 2011, has been facing stiff competition from companies such as T-Mobile US Inc TMUS.N and Sprint Corp (S.N), which offer deep discounts on a cell phone and data plans.
Verizon has pivoted to mobile video and advertising by making high-profile acquisitions – it is buying Yahoo for $4.83 billion and had picked up AOL for $4.4 billion last year.
Reuters reported earlier this year that Verizon had launched an auction to sell the data center assets.
The company said about 250 Verizon employees, mainly in the operations functions of the acquired data centers, will become Equinix employees.
For Equinix, the world’s biggest provider of data centers, the acquisition further bolsters its presence in the Americas.
“We’ve been looking at these assets for a long time …(they) check a number of strategic boxes for us,” Equinix Americas President Karl Strohmeyer said in a call with analysts.
The acquired portfolio includes about 900 customers, bringing Equinix’s total number of data centers to 175 in 43 markets.
Equinix was advised by Evercore, J.P. Morgan Securities LLC, and Davis Polk & Wardwell LLP.
Citi and Guggenheim Partners were financial advisers to Verizon, while Jones Day provided legal counsel to Verizon.
Shares of Equinix were up 1.8 percent at $337.98, while Verizon was little changed in early trading.
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Source: Reuters.com
