Friday, January 28, 2011

Thank You Verizon! Terremark Gets $19 Offer

After the close last night, Verizon Communications (VZ) agree to buyout Terremark WorldWide (TMRK) for $19. The stock closed just above $14 yesterday providing for a 35% pop today.

TMRK was one of the larger holdings in the Opportunistic portfolios so that initially gave those portfolios a nice pop today. Unfortunately the market has become overly worried about a little disturbances in Egypt and the market has sold off since the opening. Did we learn anything from Greece?

The main reason we're excited about this offer from Verizon is that TMRK was on the list of stocks to sell. TMRK has had a huge gain over the last year due to its cloud offerings and growth. Unfortunately though they continue to borrow money to open new centers and lack actual profits. Considering the path to profits leads us to at least 2012, this investment had become extremely risky.

Its interesting that VZ claims the deal will have no impact on earnings in 2011. Possibly TMRK is so small that any impact will be immaterial at this point in the story, but they are losing money so it has be negative to a certain degree.

Again, thank you Verizon! Happy to move on with a huge gain. Sold all positions at $18.96. Its possible that a higher bid will come along, but don't see that as likely.


Via TMRK PR:


  • today announced a definitive agreement under which Verizon will acquire Terremark, a global provider of managed IT infrastructure and cloud services, for $19.00 per share in cash, or a total equity value of $1.4 billion.  
  • Pursuant to the agreement, Verizon anticipates that it will commence a tender offer between Feb. 10, 2011, and Feb. 17, 2011, for all shares of common stock of Terremark. The tender offer price constitutes a premium of 35 percent per share over today's closing price.


Disclosure: No positions at this time.

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