Data center hosting and cloud computing providers continue to be gobbled up.
CenturyLink said Wednesday that it will acquire Savvis, a hosting and cloud computing provider with big established enterprise customers, in a deal valued at $2.5 billion. The purchase values Savvis at $40 a share, an 11 percent premium from where Savvis closed Tuesday.
CenturyLink is the third largest telecom provider in the U.S. The Savvis deal gives it more enterprise heft to compete with AT&T and Verizon.
In recent months, hosting companies have been acquired at a rapid clip. To wit:
- Verizon bought Terremark.
- Time Warner Cable bought Navisite.
- Savvis was an obvious acquisition choice and now Rackspace and Equinix look like takeover targets.
Savvis shareholders will get $30 a share in cash and $10 in CenturyLink shares.
With the deal, CenturyLink will become a large managed hosting provider. CenturyLink said the Savvis deal will boost revenue and cash flow.
The combined companies will have 48 data centers in North America, Europe and Asia and a large network. CenturyLink said it will integrate Savvis into one unit with its hosting operations. Savvis CEO James Ousley will lead the unit.
Separately, Savvis reported first quarter earnings. The company reported a first quarter net loss of $1.8 million, or 3 cents a share, on revenue of $257 million.