Verizon Communications could be close to selling its data center business to Equinix for around $3.5 billion, according to Cowen & Co. analyst, Colby Synesael.
"We believe a transaction involving Verizon's co-location assets is imminent and that Equinix is the most likely acquirer," he says.
According to reports, Verizon’s data center assets are hot property, with its Miami and Culpeper locations being highly desirable.
As far as acquisitions go, Verizon acquired cloud service firm Terremark in 2011 for $1.4 billion and agreed to buy Yahoo in July for $4.8 billion.
According to a Reuters report issued in January, Verizon's colocation assets include 48 data centers which currently generate earnings of about $275 million.
"Based on our channel checks, we believe the portfolio includes 14 facilities which primarily include those Verizon inherited when it bought Terremark in 2011," says Synesael.
"We estimate EQIX could pay 13 to 13.5 times EBITDA, or $3.5 billion, and believe such a transaction would be viewed as positive for Equinix and neutral to Verizon."
The two companies already have a partnership, so the rumours of a data center merger isn’t too much of a stretch.
Verizon and Equinix have a joint solution that builds a bridge between a Verizon Private IP network, a MPLS-based virtual private network (VPN) solution, and leading cloud service providers.
The two companies offer a broad global reach for both the Verizon Private IP network and SCI platform too. Their services are deployed in 16 data centers worldwide with access to more than 2,500+ cloud service providers inside Equinix IBX data centers
At this stage, neither Verizon or Equinix have commented on the acquisition.