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Telecom Giant CenturyLink Acquires Cloud Provider Savvis

Telecommunications heavyweight CenturyLink on Wednesday said it has agreed to acquire managed hosting and cloud provider Savvis for $2.5 billion.

The deal marks the latest in which a major cloud provider was acquired by a traditional provider of communications services. Verizon recently finalized its deal to acquire Terremark for $1.4 billion, and Time Warner Cable agreed earlier this year to acquire NaviSite for $230 million.

Monroe, La.-based CenturyLink is paying an 11 percent premium for Savvis based on its stock closing price on Tuesday, and a 53 percent premium since the beginning of the year. CenturyLink said Savvis will let it provide managed hosting and cloud services to its enterprise customers.

"Today, businesses are shifting the way they manage their information technology services and infrastructure, and this transaction helps us meet these needs by offering Savvis' leading products and services coupled with CenturyLink's network," said Glen F. Post III, CenturyLink's president and CEO, in a statement. "We look forward to working with the Savvis team to leverage CenturyLink's significant scale and scope to fully realize the potential of Savvis' capabilities for our combined customers."

CenturyLink said it intends to integrate its existing hosting business and those of Savvis into a single business unit, which will be based in St. Louis, where Savvis is headquartered, and led by the Savvis management team. Savvis CEO James Ousley will run the unit.

"We believe that combining our proven capabilities in cloud infrastructure and managed hosting with CenturyLink's hosting assets and large base of business customers will create powerful opportunities to accelerate growth," Ousley said in a statement. "We also look forward to making the full resources of a much larger network infrastructure available to our customers."

With the combined entity, CenturyLink said it will operate 48 datacenters throughout North America, Europe and Asia, totaling more than 1.9 million square feet of datacenter floor space.

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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