May 19, 2002 -- Reuters will purchase SAVVIS Communications' St. Louis data center for $35 million, and then lease one-third of the center back to SAVVIS, the two companies said today.
The 100,000 square foot data center in Hazelwood, Mo. is "built to the most stringent requirements for financial services applications, so it is well suited to Reuters' purposes and is an excellent venue for both current and future SAVVIS clients," said Rob McCormick, Chairman and CEO of SAVVIS.
SAVVIS will sign a 10-year lease at "attractive financial terms," McCormick said. The companies expect the sale to close in June.
SAVVIS will use $12.9 million of the proceeds of the sale to reduce its debt to approximately $50 million, and will use the remainder to support other strategic investments, including its recent addition of Intel Online Services' hosting assets. The acquisition of the Intel business allowed SAVVIS to expand its hosting footprint to 7 worldwide centers and add approximately $24 million in annual hosting revenue.
"In the short term, the data center transaction is a win-win for both companies," said McCormick. "SAVVIS retains all the space it needs in a state-of-the-art center from which we will continue to deliver our award-winning managed hosting services, and we receive $35 million in cash. Reuters, on the other hand, achieves its goal of centralizing network support operations in this top facility in St. Louis."
SAVVIS Communications is a managed services provider that delivers IP virtual private networks, hosting, and application services to businesses.