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Verizon Pulls Surprise, Buys Cloud Vendor Terremark

A $1.4 Billion Deal Illustrates Industry Momentum

 Verizon Communications up and surprised everybody late Thursday by saying that it's buying Miami-based cloud, co-location and managed IT infrastructure purveyor Terremark Worldwide Inc for $1.4 billion cash, or $19 a share, a 35% premium.

 Someone could of course come along and make a better offer; Wall Street, which pushed the stock above the bid anticipating a counter-offer, immediately wanted to know if Terremark had been shopped.

It does a lot of business with the US government agencies like handling USA.gov and Data.gov and counts some of the world's largest companies as clients including Verizon, underpinning its Computing as a Service, SMB widgetry. Verizon's also been reselling Terremark's hosting services.

Verizon's got commitments from the Terremark board and the three stockholders who own 27.6% of the company. There's also a pre-February 25 breakup fee of $37.5 million and a post-February 25 penalty of $52.5 million.

Details are otherwise sparse. The pair won't have a conference call until early Friday morning. Needless to say Verizon expects the acquisition of Terremark's portfolio to accelerate its own all-important save-us-from-VoIP "everything-as-a-service" cloud strategy. It called the acquisition a "tipping point."

It means to run the roughly $350 million-a-year Terremark, which operates 13 data centers in the US, Latin America and Europe, as a wholly owned subsidiary and keep its name and management team.

Verizon's tender offer is supposed to kick off between February 10 and February 17 and run until late in the quarter.

Verizon was represented by Goldman Sachs and Weil, Gotshal & Manges, and Terremark by Credit Suisse Securities (USA) LLC and Greenberg Traurig. Credit Suisse is one of Terremark's investors.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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