Verizon to Sell Data Centers to Equinix for $3.6 Billion

  • Deal with REIT includes 24 sites across 15 metropolitan areas
  • Verizon had acquired the assets from Terremark five years ago

Verizon Communications Inc. agreed to sell its data-centers business to Equinix Inc. for $3.6 billion in cash as the company turns its focus to mobile video advertising.

The deal includes 24 facilities across 15 metropolitan markets, according to a statement Tuesday. Equinix, based in Redwood City, California, operates as a real estate investment trust, mostly holding interconnected data centers. With the deal, Equinix now has 175 data centers in 43 markets around the world.

For Verizon, the nation’s largest wireless carrier, the deal marks a retreat from the data-centers business five years after it bought Terremark Worldwide Inc. for $1.3 billion. As prospects faded and Verizon invested in more areas like mobile video and advertising, the company decided to put the data-centers unit up for sale about two years ago.

As the telecommunications industry matures, Verizon is shedding assets and turning the business in a new direction. Using go90, its video-streaming business, AOL’s web properties and the pending purchase of Yahoo! Inc., Verizon is entering a mobile video and advertising arena to challenge Google and Facebook Inc.

The sale to Equinix, which is expected to close in the middle of next year, would help replenish Verizon’s cash after it acquires Yahoo for $4.83 billion and bids for coveted airwaves in a federal auction.

Shares of Verizon rose as much as 1.8 percent to $50.62 in New York Tuesday. Equinix climbed 3.2 percent to $342.81.

After the deal, which includes sites in the U.S., Brazil and Colombia, Verizon will still offer data-center services using Equinix as a partner.

Verizon’s advisers were Citigroup Inc. and Guggenheim Partners, with Jones Day providing legal counsel. Equinix was advised by Evercore Partners Inc., JPMorgan Chase & Co. and law firm Davis Polk & Wardwell LLP.

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