Verizon pitching hard at strategics for data center divests

Provided exclusively by Mergermarket

Verizon [NYSE:VZ] is making a hard pitch for potential strategic buyers of its data center portfolio, a source familiar and sector advisor told this news service.

According to the source and advisor, non-disclosure agreements have been signed by interested parties, with both a large number of strategics and private equity sponsors engaged in this early stage of the process.

Strategics are very interested in the high-quality assets that Verizon has in Amsterdam, Miami and near to Washington DC, the source explained, but that leaves the other 45 data centers in the portfolio.

This news service reported in November that Verizon had narrowed its divest efforts to its data center segment, and in December that the company was sending out teasers to potential bidders.

The source and banker said Verizon is looking to strategic bidders first, despite a general perception that the portfolio is more suited to sponsor buyers. The complicated nature of the carve-out was cited as the reason. It would be much easier for Verizon to sell the entire portfolio to one buyer, which strategics are better-equipped to do, they added.

However, Verizon’s portfolio, like those of other integrated telcos like AT&T [NYSE:T] or CenturyLink [NYSE:CTL] who have tried or are considering divesting their data centers, varies in quality, the source said.

Sector advisors previously told this news service that AT&T’s effort at a data center divest floundered partly because the company was not willing to be flexible on deal structure. The source said Verizon is likely to be less “value sensitive” during this divest process, and would opt for a lower price if it meant cleanly divesting its entire portfolio.

Verizon declined to comment.

by Jonathan Guilford

As seen in the mergermarket newsletter on 03/02/2016

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