Terremark Buys Data Return

Terremark Worldwide started its life as a NASDAQ company with a flourish this morning, announcing that it will buy managed hosting Data Return LLC from investment firm Saratoga Partners for $85 million. Terremark, a Miami-based data center services firm, will pay $70 million in cash and $15 million in Terremark stock, or about 1.9 million shares at $7.79 per share, with the deal expected to close by June 30. Today is Terremark's first day trading on the NASDAQ under the symbol TMRK, having shifted from the AMEX, where it traded under TWW.

Terremark said the Data Return acquisition will provide an important foothold in the growing market for virtualization and utility computing. Data Return, which was initially known for its expertise in Microsoft-based hosting, operates a grid computing service known as Infinistructure.

"We believe that virtualization and utility computing are revolutionizing the delivery of IT services as they continue to migrate towards network centric computing," said Manuel D. Medina, Terremark's Chairman and CEO, who said the deal "better positions us to capture the robust market demand we are seeing for virtualized IT solutions."

Saratoga Partners bought Data Return in May 2003, paying $28 million for the assets in a bankruptcy sale of Divine Inc., a failed IT services roll-up. Thus, today's sale price is almost exactly three times what Saratoga paid to buy Data Return four years go. It's also well above the $63 million that Divine paid to buy Data Return in early 2002.

Data Return has more than 250 customers primarily located throughout the United States and include H&R Block, BMW North America, HP and LEGO. In 2006 Data Return had revenues of approximately $55 million. Terremark said the deal builds on its 2005 acquisition of Dedigate, N.V., and noted that the Infinistructure platform is highly scalable and can be easily deployed in new locations. Terremark is in the midst of en expansion that will add data centers in Virginia and Silicon Valley.

"The addition of Data Return's innovative virtualized hosting and service delivery platforms are a strategic fit with Terremark's network rich colocation and managed service business and will allow us to realize significant synergies with the combined companies," said Medina.