Verizon sale of $3.5bn data centre business to Equinix is "imminent"
Verizon is on the verge of selling its data centre business to Equinix in a deal predicted to be worth around $3.5 billion, according to analysts.
An investor note from analysts Cowen & Co. claim a Verizon sale of its co-location assets is “imminent” with Equinix front of the queue.
"We believe a transaction involving Verizon's co-location assets is imminent and that Equinix is the most likely acquirer," said Cowen analyst Colby Synesael.
Verizon acquired a number of data centres when it bought Terremark in 2011 for $1.4 billion, but has been selling off non-core assets over the last year, including its wireline properties in California, Florida and Texas to Frontier Communications earlier this year.
Reports claim Equinix is keen to buy Verizon’s data centre assets in Miami, Florida and Culpeper, Virgina. Overall, Verizon owns around 48 colocation centres, according to a report from Reuters in January, generating earnings of around $275 million a year.
"Based on our channel checks, we believe the portfolio includes 14 facilities which primarily include those Verizon inherited when it bought Terremark in 2011," Synesael wrote. "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."
Outgoing CFO Fran Shammo has previously admitted Verizon will make a decision about the future of its data centre business in the third quarter. But the sale would mark a U-turn on last November, when Shammo said Verizon had “no plan” to sell off its portfolio.
Verizon is on the cusp of acquiring Yahoo! For $4.8 billion, though reports claim the telecoms giant is seeking a $1 billion discount following revelations that the content provider had been hacked in 2014.