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Verizon To Acquire Terremark

Looking to accelerate its footprint as a provider of cloud and enterprise managed services, Verizon Communications Inc. today said it has agreed to acquire Terremark Worldwide Inc. for $1.4 billion.

Miami-based Terremark is regarded as a leading global provider of data center hosting and cloud services. It competes with the likes of Rackspace Hosting, Amazon Web Services, Savvis and GoGrid. Terremark's core offerings are infrastructure-as-a-service (IaaS) and cloud hosting to large enterprise and government customers.

"We think that cloud computing is a huge growth opportunity in the communications business and we saw just a perfect match with Terremark," said Verizon president and CEO Lowell McAdam, speaking on a conference call today announcing the deal.

Terremark will continue to operate as a wholly owned subsidiary of Verizon and will retain the Terremark brand. Terremark chairman and CEO Manual Medina will continue to lead the unit, McAdam said. Over time, Verizon will integrate its assets, such as its Cybertrust security offering and its global data center platforms, into Terremark, McAdam said.

"We have built a reputation as a pioneer in the managed hosting industry with more than a decade of experience managing complex, transaction-intensive applications for global 1000 companies and federal agencies," Medina said. "The power of Terremark and what makes us unique in the industry are our ability to combine cloud, co-location, dedicated and virtualized hosting, as well as cyber security and disaster recovery into a seamlessly-integrated hybrid environment."

McAdam said Verizon wants to move aggressively into enterprise cloud computing and that acquiring Terremark was a faster route to getting there than building its own capabilities.

"This is a classic make-buy decision," he said.  "By the time you build data centers and then outfit them and build the employee capability and all of the software applications that ride in these data centers, it takes time, and to be honest, that is not our core competency."

Thinkstrategies analyst Jeffrey Kaplan, said in a blog post the acquisition of Terremark accelerates Verizon's move into cloud computing. "Terremark offers enterprise-class IaaS solutions which fit well into Verizon’s portfolio and target market," he said.

The deal is subject to Hart-Scott-Rodino antitrust waiting period, but the companies said they are hoping to close within three months.

About the Author

Jeffrey Schwartz is editor of Redmond magazine and also covers cloud computing for Virtualization Review's Cloud Report. In addition, he writes the Channeling the Cloud column for Redmond Channel Partner. Follow him on Twitter @JeffreySchwartz.

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