Current Analysis
Markets We Cover Solutions & Tools Who Can Benefit What is Competitive Response Custom Solutions
Competitive Intelligence Highlights
Business Network
and IT Services
MARKET SEGMENTS
Data Center and Cloud Services
Mobility Services
Network Services
Security Services
IP Telephony and UC Services
Wholesale Services
Global Network Tracker
INTELLIGENCE REPORT SUMMARIES
United States
Europe
Global Enterprise
Wholesale
COMPANY ANALYSIS
United States
Europe
Global Enterprise
Wholesale
PRODUCT ANALYSIS
United States
Europe
Global Enterprise
Wholesale
 





CenturyLink Looks to Make Its Mark in the Cloud with Savvis Acquisition

| Jul 19, 2011 | Data Center Services
| Analyst: Amy Larsen DeCarlo

Event Summary

July 15, 2011 -- CenturyLink and Savvis finalized their previously announced merger, creating an enterprise-focused hosting and colocation provider with an international reach and infrastructure to support a range of outsourced IT and cloud services. Later this year, CenturyLink plans to integrate its hosting business with Savvis' managed hosting and cloud services to focus on increasing CenturyLink's market share in these areas. The integrated hosting business, which will operate under the Savvis brand for the foreseeable future, will be based in St. Louis, led primarily by key members of the Savvis leadership team including Chief Executive Officer Jim Ousley.

Quick Take


Analytical Summary

• Current Perspective: Positive on CenturyLink closing the Savvis acquisition and outlining plans to capitalize on the Savvis brand, because CenturyLink inherits immediate credibility in complex managed IT services for the enterprise market. CenturyLink plans to keep the Savvis executive team intact. By announcing its intention to integrate all of its hosting resources into one unit under Savvis’ moniker and guidance, CenturyLink reinforces its plans to build on Savvis' strategic services to create a compelling solution set.

• Vendor Importance: High to CenturyLink, because Savvis fills some significant gaps in its managed IT services portfolio around key areas such as cloud and security services. The Savvis acquisition also brings important management experience which the company will need to navigate the enterprise managed IT services market, where the carrier has had limited presence.

• Market Impact: Moderate on the managed IT services market, because by pooling all of its hosting and colocation resources under one enterprise-focused organization, CenturyLink can create a unit that is much more competitive than if it maintained separate subsidiary organizations. The resulting business could make CenturyLink a force to be reckoned with in strategic managed IT services deals for large enterprise and MNCs, where predecessor companies CenturyLink and Qwest have not been a big factor in the past.


CLIENTS ONLY

Current Perspective

Competitive Strengths and Weaknesses

Response & Recommendations

Buyer Actions

| Client access - Full report in Data Center Services | More information

Top

Top
Current Analysis Offices
Washington, D.C. +1 703 404 9200, Toll free 877 787 8947
Paris, France +33 (0) 1 41 14 83 15
© 2012 Current Analysis Inc. All rights reserved. | Privacy Policy
Follow Current Analysis


CenturyLink and Savvis Complete Merger

MONROE, La., July 15, 2011 -- CenturyLink, Inc. (NYSE: CTL) and Savvis, Inc. today completed their previously announced merger. The combination creates a premier managed hosting and colocation provider with global scale positioned for leadership in meeting customer demand for outsourced IT and cloud services.

"The combination of CenturyLink's hosting and network assets with Savvis' proven solutions in colocation, managed hosting and cloud services substantially enhances CenturyLink's capabilities and immediately provides the company with a solid platform for future growth," said Glen F. Post, III, chief executive officer and president of CenturyLink. "The transaction helps us meet the accelerating demand for cloud-based services through a robust hosting presence, including 48 data centers in North America, Europe and Asia. CenturyLink is now positioned to address complex customer needs with our colocation, hosting and cloud products."

Later this year, CenturyLink plans to integrate its hosting business with Savvis' managed hosting and cloud services to focus on increasing CenturyLink's market share in these services. The integrated hosting business, which will operate under the Savvis brand for the foreseeable future, will be based in St. Louis and led primarily by key members of the Savvis leadership team, including chief executive officer Jim Ousley.

Under the terms of the agreement, Savvis stockholders will receive $30 per share in cash and 0.2479 of a share of CenturyLink common stock (which had a value of $10 based on the valuation formula in the merger agreement) for each Savvis share held at the close of the transaction.

At closing, CenturyLink also prepaid approximately $546 million of Savvis' credit facility debt.

CenturyLink expects the combination to improve its revenue, EBITDA and free cash flow growth profile, and also 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, as adjusted to exclude integration costs, in the first full year following the close.