Buyout Binge for Cloud Computing Companies?
Paolo Gorgo submits: On Thursday, Jan 27, 2011, Verizon (VZ) purchased Terremark (TMRK) for $1.4 billion in a move to accelerate its "everything-as-a-service" cloud strategy. Yesterday, Time Warner Cable (TWC) announced that it will acquire managed hosting and cloud services provider NaviSite (NAVI) for $230 million. Although the acquisitions are relatively different in size and cost, two cloud related deals in less than a week by cable/telcos did not happen by chance. The question is: will this represent only the start of a series of acquisitions in this space, as Michael Nelson, an analyst at Mizuho Securities USA Inc., seems to suggest? First, some data about the latest deal. Time Warner Cable will pay $5.50 for each share of NaviSite, a 33% premium to Tuesday’s closing price of $4.13, almost in line with the 35 % premium paid by Verizon for Terremark. Time Warner Cable said it expects the deal to immediately add to earnings and free cash flow. In addition, it also said it anticipates NaviSite's net operating losses will provide $40 million in tax savings after the deal's expected closing. NaviSite's stoComplete Story »