CenturyLink to acquire hosting/collocation provider Savvis

Apparently still hungry after swallowing Qwest, CenturyLink, Inc. (NYSE: CTL) will acquire Savvis, Inc. (Nasdaq: SVVS), a supplier of cloud infrastructure and hosted IT services for enterprises.

Apparently still hungry after swallowing Qwest, CenturyLink, Inc. (NYSE: CTL) will acquire Savvis, Inc. (Nasdaq: SVVS), a supplier of cloud infrastructure and hosted IT services for enterprises. CenturyLink will acquire all outstanding shares of Savvis common stock in a cash and stock merger valued at $40 per share, or a total of approximately $2.5 billion, plus net debt of approximately $0.7 billion which will be assumed or refinanced at close.

Both boards of directors have approved the deal.

Savvis stockholders will receive $30 per share in cash and $10 in shares of CenturyLink common stock, subject to adjustment. The sum is an 11% premium over Savvis's stock price at the close of trading April 26, 2011 and a 53% premium versus Savvis's stock price at the start of 2011.

"The transaction creates a premier managed hosting and colocation provider with global scale in a high growth sector, and is expected to be accretive to revenue growth and cash flow per share," said Glen F. Post, III, CenturyLink CEO and president. "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's leading products and services coupled with CenturyLink's network. We look forward to working with the Savvis team to leverage CenturyLink's significant scale and scope to fully realize the potential of Savvis's capabilities for our combined customers, while also enhancing value for our shareholders and providing opportunities for our employees."

Upon completion of the acquisition, CenturyLink will operate 48 data centers located in North America, Europe, and Asia with more than 1.9 million square feet of gross floor space; a national 207,000 route mile fiber network; a 190,000 mile global access network; and a customer list that includes a majority of the Fortune 500 and Fortune 1000 companies.

The acquisition of Savvis is expected to improve CenturyLink's revenue, EBITDA and free cash flow growth profile. CenturyLink expects to realize approximately $70 million in full run-rate annual operating cost and capital expenditure synergies. The transaction is expected to be accretive to CenturyLink's free cash flow per share, excluding integration costs, in the first full year following the close.

CenturyLink anticipates integrating its hosting business and Savvis' managed hosting and cloud services into a single CenturyLink business unit based in St. Louis. Savvis CEO James Ousley will lead the unit.

The transaction is subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, along with other customary closing conditions, including review by the Federal Communications Commission and international regulators. The transaction also is subject to the approval of Savvis stockholders.

The companies anticipate closing the transaction in the second half of 2011.

Visit CenturyLink


Visit Savvis

More in Business