Windstream Holdings Inc. has hired Royal Bank of Canada to advise on the sale of its data storage business and is aiming to raise $500 million to $750 million, according to people familiar with the matter.
Potential bidders for the unit of the Little Rock, Arkansas-based telecommunications firm include private-equity players ABRY Partners and GI Partners, said one of the people, who asked not to be identified because the matter is private. Windstream purchased the hosted-solutions business from ABRY in 2010 for $310 million.
Windstream shares jumped as much as 10 percent on the news and closed up 6.4 percent at $6.69 in New York.
Phone companies including Windstream added data centers to offer storage and other so-called cloud services in an attempt to find new growth as their landline business declined. The cost of maintaining these temperature-controlled facilities, known as server farms, plus the competition from larger rivals including Amazon.com Inc., have created challenges.
A representative for Toronto-based RBC, Canada’s largest bank, declined to comment. Representatives from Windstream, ABRY and GI weren’t immediately available for comment.