Verizon nears deal to sell data centres to Equinix for around $3.5 bn

08 Oct 2016

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Verizon Communications, which is buying Yahoo for $4.83 billion, is nearing a deal to sell its data centres to Equinix Inc for around $3.5 billion, according to a research report from a Cowen & Co. analyst.

The deal is expected to involve 14 Verizon data centers, most of which involves Verizon's 2011 acquisition of Nasdaq-listed cloud service firm Terremark for $1.4 billion.

At the time of the deal, Verizon had more than 220 data centers in 23 countries and the Terremark deal gave it additional 13 data centres in Dallas, California, Brazil, Amsterdam and other locations.

Colby Synesael, a Cowen & Co analyst said in the report: ''We believe a transaction involving Verizon's co-location assets is imminent and that Equinix is the most likely acquirer.''

Synesael believes that Verizon's crown-jewel is the 750,000-square foot NAP of the Americas in Miami, which alone generates around $100 million of the $250 million - $275 million in revenue for Verizon's data centres.

Verizon has been selling off noncore assets, including residential phone lines in order to pay off debt accumulated through its 2014 acquisition of Vodafone Group Plc and in part to fund its $4.8 billion proposed July acquisition of Yahoo.

According to New York Post report, Verizon is now pushing for a $1-billion discount off its pending agreement to buy Yahoo after the once Internet giant  two weeks ago revealed that it had been hacked in 2014 and that users' names and passwords for 500 million accounts were hacked. (See: Verizon pushing for $1-bn discount on deal to buy Yahoo)

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