Verizon Taps Terremark for $1.4B

Verizon Communications Inc. (NYSE: VZ) revealed plans to acquire cloud computing and managed IT infrastructure specialist Verizon Terremark for US$1.4 billion in cash late Thursday afternoon.

Verizon is offering $19 a share for Terremark, which constitutes a premium of 35 percent over today's closing price for the stock. The operator plans to commence a tender offer between Feb. 10, 2011, and Feb. 17, 2011, for all of Terremark's shares. Subject to regulatory approval, Verizon expects to close the tender offer late in the first quarter of 2011.

Terremark will operate as a wholly owned subsidiary of Verizon.

Why this matters
Verizon wants Terremark to enhance its "everything-as-a-service" cloud strategy with a parcel of new applications aimed at enterprise customers and the government sector. Verizon initially teamed up with Terremark in September 2010 to take on Amazon Web Services Inc. and other rivals in the small-business sector. The move helped Verizon to get into the market more quickly than if it had developed its own offering from scratch and likely helped cement a more permanent relationship between the two.

The planned buyout shows the importance that Verizon places on the enterprise cloud-computing sector, since the operator rarely makes acquisitions.

For more
For more on Verizon, its cloud ambitions, one of its Bridging the Chasm personnel moves and an overview of carrier cloud economics, please see:

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