- Cowen notes they believe that Enterprise-focused telecom carriers increasingly must have managed hosting to compete, and Savvis (NASDAQ:SVVS) is the best target in the market. Acquisition is also likely the easiest exit for 50% holder Welsh Carson. Firm views Verizon as the most likely buyer, but sees Level 3 and others as possibilities. They expect 19% outperformance relative to the market over the next 12 months without an acquisition. A deal in the near term could be at a similar price.
To compete with AT&T, which is a top provider of hosting and co-location, the firm believes other enterprise-focused telecom carriers must strengthen their managed hosting offerings.
Cowen view VZ as the most likely buyer. Savvis's hosting would fill in the blank left by MCI's limited hosting offering, putting VZ more on par with AT&T. LVLT also has a strategic need for hosting such as Savvis, but has less capability to pay cash. Other backbone operators such as GLBC could also consider Savvis.
Most acquirers could transfer Savvis traffic to their own network and shut down the Savvis network, eliminating virtually all network costs.
Notablecalls: Expect to see buy interest in SVVS today and over the next week as it's not every day that you hear a firm saying a co is an acquisiton tgt will be gone by yearend.
To compete with AT&T, which is a top provider of hosting and co-location, the firm believes other enterprise-focused telecom carriers must strengthen their managed hosting offerings.
Cowen view VZ as the most likely buyer. Savvis's hosting would fill in the blank left by MCI's limited hosting offering, putting VZ more on par with AT&T. LVLT also has a strategic need for hosting such as Savvis, but has less capability to pay cash. Other backbone operators such as GLBC could also consider Savvis.
Most acquirers could transfer Savvis traffic to their own network and shut down the Savvis network, eliminating virtually all network costs.
Notablecalls: Expect to see buy interest in SVVS today and over the next week as it's not every day that you hear a firm saying a co is an acquisiton tgt will be gone by yearend.
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