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October 7, 2016

Report says Verizon is to sell its data centres to Equinix for $3.5bn

Equinix is believed to be the most suited acquirer.

By Hannah Williams

According to a financial analyst’s report, Verizon communications is expected to be drawing closer to selling its data centres to Equinix for around $3.5 billion.

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

Out of the 14 data centres Cowen & Co. believes may be in line to sell, the 750,000-square foot NAP of the Americas in Miami is the crown jewel.

The analyst estimates that this facility alone is responsible for about $100 million of the $250 million to $275 million in revenue they believe the portfolio generates for Verizon.

Verizon has declined to comment, instead saying that the company will provide an update on its sale process when it reports third quarter earnings.

equinixThe possible sale comes as a shift for the company, as Verizon acquired the cloud service firm Terremark in 2011 for $1.4 billion.

As it now focuses on its wireless business and digital media, Verizon has started to sell off its noncore assets over the past year, which includes residential phone lines.

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Part of its move to digital media sees the recent agreement for Verizon to buy Yahoo for $4.8 billion in July.

Colby Synesael said: “Revenue at the unit has been declining based on what we believe has been a lack of focus by Verizon which is why Verizon has elected to sell them to begin with.

“In the hands of Equinix we believe it is highly likely the company can right the ship although this could take upwards of 1-2 years post close.”

Some of Equinix’s customers include Amazon Web Services and Microsoft.

Synesael added: “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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