Update: Savvis Denies Hiring Investment Banker

Savvis Communications (SVVS) is denying a report by PE Hub that it has hired investment bank Qatalyst Partners as a financial adviser. Savvis has been mentioned as a potential buyout target in recent speculation about cloud computing acquisitions.

Rich Miller

March 7, 2011

2 Min Read
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The cloud computing sector has been abuzz with takeover speculation since January, when Verizon announced plans to acquire Terremark for $1.4 billion. One of the companies mentioned frequently in the takeover speculation is Savvis Communications, the managed hosting provider that has built a full suite of enterprise cloud computing offerings.

On Friday, PE Hub reported that Savvis had hired investment bank Qatalyst Partners as a financial adviser. When contacted for comment, Savvis responded via email. "We don’t comment on rumor and speculation," a Savvis spokesman wrote in an email to PE Hub.

That stance changed this morning after the PE Hub report was picked up by other news outlets (including Data Center Knowledge). Savvis CEO Jim Ousley is now firmly denying that Savvis has reached an agreement with San Francisco-based Qatalyst. "We have not had any discussions with Qatalyst, not a single one," Ousley said in an interview with Dow Jones Newswires. "We have no idea where that rumor came from. We've never talked to those people."

PE Hub had cited three sources that said Savvis had hired Qatalyst, while one source said it isn’t "definitive." It's not clear why Savvis declined to comment on the report Friday, only to issue an authoritative denial once trading had begun. Shares of Savvis jumped about 9 percent this morning on the speculation, reaching $36 a share after closing Friday at $33.23. Savvis currently trading at $34.02, up about 2 percent on the day. The company has a market capitalization of about $1.8 billion.

Ousley told DCK last month that the company is not in active sale talks, but said he hopes the Verizon-Terremark deal will raise awareness of the value of Savvis and the infrastructure sector.

"Bigger is Better"

"Our objective is to grow as rapidly as we can," said Ousley. "The whole world is moving toward cloud services. It is a capital intensive and technical business where size and scope matter. Bigger is better. Clearly, there will be more consolidation in the sector. We either acquire or get acquired, and right now we are in acquisition mode."

Savvis subsequently announced plans to launch cloud computing services in India through a partnership with Bharti airtel, and expand its data center facilities in Atlanta, Seattle and Piscataway, N.J.

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