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Telecom to buy Revera for $96.5m

Telecom to buy Revera for $96.5m

No redundancies planned at Revera following acquisition.

Telecom has signed a conditional agreement to acquire datacentre company Revera for $96.5 million. The Revera brand will be retained and Revera will continue to run as a standalone business and customers of Gen-i, Telecom’s ICT services division, will have "immediate access to additional cloud capabilities and datacentre capacity", according to a joint announcement by the companies.

“As previously announced, Telecom is refining its business strategy to become a future-oriented, competitive provider of communication, entertainment and IT services delivered over its networks and the cloud," says Telecom CEO Simon Moutter in a statement.

"This acquisition adds a respected brand that deepens our IT services portfolio for business customers, particularly with regards to cloud services. Both Gen-i and Revera will be better positioned to respond to evolving customer needs in the areas of big data and cloud computing.”

“Revera is one of a few cloud-focused infrastructure providers in New Zealand," says Revera chief executive, Robin Cockayne.

"This focus puts us at the sharp end of the utility IT services market. However, leading this market requires continued development of new datacentres and services. We’ve enjoyed spectacular growth. But sustaining our momentum requires new investment and resources. This transaction ticks those boxes and helps Revera to build on its success so far."

CIO sister publication Computerworld first reported that Gen-i was doing due diligence on Revera two weeks ago.

The acquisition will ensure Telecom has a place on the government's infrastructure-as-a-service suppliers panel, which has three vendors - Revera, IBM and Datacom.

Revera, formerly called HDS, was created in 2002 through the management buy-out of a 51 per cent share in Japan's Hitachi Data Systems. The buy-out was led by present Revera directors Wayne Norrie and Roger Cockayne. Hitachi sold its remaining stake in the company in 2005.

It has 31 shareholders, with the Norrie and Cockayne families owning half the company.

Revera earned total revenues of about $50 million in the year to March 31, with earnings before interest, tax, depreciation and amortisation of $13 million - expected to rise to $15m this year.

At a phone press conference this morning Gen-i CEO Miles said the acquisition would not "add to the story" on the current staffing review taking place at Telecom/Gen-i and no redundancies were planned at Revera.

"Telecom has made it very clear to us that they don't want us to change in any way whatsoever," Cockayne added.

Revera employs 140 staff and operates five data centres in Auckland, Wellington, Christchurch and Hamilton. Telecom announced in March that up to 1230 jobs may go by mid this year.

On the question of datacentres, Miles said that Telecom currently had 13 datacentres around the country and three new ones were in the pipeline in Christchurch, Wellington and South Auckland.

While the Christchurch facility was very close to completion and would be unaffected, Miles said it was likely that the Wellington and Auckland datacentres would be offered to Revera as it needed extra capacity in those areas.

Miles said that Telecom has "a lot of strength" in co-location and some in infrastructure as a service (IaaS), while Revera's strength was in IaaS with some co-location. It was likely therefore that Telecom's co-location-orientated customers would continue to be serviced by Gen-i while IaaS-centric customers would be moved to Revera. However he observed that many customers started using datacentres for "co-lo" and graduated to IaaS.

The takeover will be completed in May.

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