Verizon to Acquire Terremark for $1.4 Billion

Major telecom service provider Verizon (News - Alert) Communications announced that it will acquire Terremark Worldwide (News - Alert), a provider of managed IT infrastructure and cloud services, for $1.4 billion.

The transaction is expected to accelerate Verizon's "everything-as-a-service" cloud strategy by offering a portfolio of secure, scalable on-demand solutions to business and government customers through a unified enterprise IT platform and business cloud offerings, company officials said.

Verizon is planning to operate the new unit as a wholly owned subsidiary retaining the Terremark name. Terremark's current management team will manage the company and operations.

“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,” said Lowell McAdam (News - Alert), president and chief operating officer of Verizon, 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,” McAdam added.

“This transaction, first and foremost, provides Terremark's stockholders with the opportunity for immediate, maximum value and liquidity for their investment in our common stock,” said Manuel D. Medina, chairman and CEO of Terremark.

Verizon expects to commence a tender offer during February 10-17, 2011, for all shares of Terremark. The tender offer price is at a premium of 35 percent per share over closing price on the day of the announcement. The $1.4 billion transaction is subject to the valid tender of a majority of the shares of Terremark.

Verizon has already entered into agreements with three stockholders, who have 27.6 per cent outstanding voting shares in Terremark, to tender their shares into the offer. Verizon expects to close the tender offer late in the first quarter of 2011.

The board of directors of Terremark has unanimously approved the transaction, while Verizon directors, who were present, unanimously approved the takeover of Terremark.

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