Verizon Acquires Managed Infrastructure and Cloud Provider TerreMark Worldwide

By Leah Gabriel Nurik  |  Print this article Print

Verizon will pay $1.4 billion for the managed infrastructure and cloud service provider, boosting its ongoing effort to gain traction in the cloud.

Verizon has made no secret of its intentions to rely on cloud delivery to boost revenue tied to technology solutions. Yesterday, the telecommunications giant tendered a sweet $1.4 billion offer to Terremark Worldwide, a managed IT infrastructure and cloud service provider, with the aim to strengthen and "accelerate" its current cloud strategy.

The deal, which pays a 35 percent premium on Terremark’s closing price on Thursday, was unanimously approved by the Terremark board.

Over the past year, Verizon has focused on forging partnerships meant to strengthen its cloud-based delivery of a variety of technology solutions. From its announcement with SAP’s Sybase to deliver managed mobile services to laying out its plans to provide security solutions through the cloud in May, Verizon has had its eyes set on capturing a chunk of the cloud market that has previously been dominated by AT&T.

"The key element is that Verizon is building a presence based on market leading technologies.  Terremark builds on Verizon’s technology and should help Verizon’s strategic services grow faster than AT&T over the next several years," says Gerard Hallaren a senior analyst at Avian Securities. 

Terremark and Verizon have been working together for quite some time, perhaps taking a trial run on what an acquisition may look like. In 2010, Verizon started selling Terremark’s hosting services and struck a deal to rent out 25,000 feet in the cloud provider’s data centers.

"Cloud computing continues to fundamentally alter the way enterprises procure, deploy and manage IT resources, and this combination helps create a tipping point for 'everything-as-a-service,'"  Verizon President and COO Lowell McAdam said in a  statement. "Our collective vision will foster innovation, enhance business processes and dynamically deliver business intelligence and collaboration services to anyone, anywhere and on any device."

The tender offer is expected to commence in mid-February, and Verizon hopes to close the deal by the end of Q1 this year.  Terremark focuses in delivering on-demand solutions to both enterprise and government customers around the globe.

Verizon says that it plans to keep the well-recognized Terremark brand, and its management team, while operating the new unit as a wholly owned subsidiary.