Verizon acquires Terremark, CloudSwitch

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Top M&A 2011Deal sizes:
- $1.4 billion for Terremark
- Terms undisclosed for CloudSwitch

Why are these acquisitions relevant? Although Verizon (NYSE: VZ) had in previous years been busy selling off its rural phone assets to the likes of FairPoint (Nasdaq: FRP) and Frontier (NYSE: FTR) in areas that aren't core to its business future, the service provider stayed mostly quiet about buying any properties of its own.

It broke that silence early this year when it reached a deal to acquire cloud and managed service provider Terremark for $1.4 billion.

By acquiring Terremark, its largest deal since its 2006 purchase of MCI, Verizon is able to expand its "everything as a service" and data center capabilities both domestically and internationally. When it completed the acquisition, Verizon complemented its buildout of 220 data centers in 23 countries with an additional 13 data centers housed in the United States, Europe and Latin America as well as gaining a number of federal government customers.  

Like its newly minted ILEC brother CenturyLink (NYSE: CTL), which bought Savvis, Verizon is running Terremark as its own unit.

Terremark has hardly stood still since becoming part of Verizon. The provider has expanded its data center footprint not only in its Network Access Point (NAP) West in Santa Clara, Calif. location, but also opening a Network Access Point (NAP) in Amsterdam.  

Now, a report has emerged that Terremark will manage all of Verizon's data centers.

Complementing the Terremark deal for cloud and data center services is its later acquisition of cloud software provider CloudSwitch.

Although it did not reveal the terms of this deal, the acquisition of Burlington, Mass.-based CloudSwitch gives Verizon software that it can use to help ease its enterprise customer's transition to the cloud. Enterprises will be able to transition applications to the cloud without having to change the application at the application or infrastructure layer.

Verizon will now be able to combine CloudSwitch's capabilities to any cloud implementation (private-to-public, public-to-public and hybrid) with Terremark's IT and security capabilities to serve it customer base.

And while many enterprises have and still have concerns about Verizon's CEO Lowell McAdam said during the recent 39th annual UBS Global Media and Communications Conference that he's seen an uptick in interest in enterprises considering using a cloud service .

"About 18 months ago we had a customer advisory board in Charlotte, N.C., and all of the customers there--I would say maybe 10-20 percent said, we'd be very interested in the cloud and rest said no," he said. "That's almost flipped now with almost 80 percent saying they want to put our stuff into your cloud, and I think the economy has helped that because they see there's an advantage to cut their costs by leveraging our scale and our infrastructure instead of doing it themselves."