By Liana B. Baker and Supantha Mukherjee
(Reuters) - Telecommunications firm CenturyLink Inc said it would sell its data centers and colocation business to a group of funds for $2.15 billion in cash and a minority stake to be valued at $150 million in the investor's group new private infrastructure company.
The consortium, made up of funds advised by BC Partners, Medina Capital Advisors and Longview Asset Management, will own CenturyLink's portfolio of 57 data centers at the close of the deal, expected to be in the first quarter of 2017.
CenturyLink said it would use the net proceeds from the sale to partly fund its $24 billion acquisition of Level 3 Communications Inc, which it announced on Monday. Its shares have sank since that deal announcement on concerns the companies will have a hard time integrating and performing as a combined company, according to analysts.
CenturyLink, which operates data centers that provide broadband, voice, video, data and managed services in North America, Europe and Asia, has been exploring a sale of some of its data center assets. Reuters reported exclusively last month that BC Partners was in the pole position to acquire the portfolio.
While CenturyLink is divesting its data centers, it will continue to operate its business providing data center services and connections to customers.
Centurylink will retain a 10 percent stake in the new venture created by BC Partners and Medina Capital that includes the data centers as well as small security assets.
"We thought it would be a good idea and opportunity to leverage these security assets in the marketplace and internally," Dean Douglas, CenturyLink's president of sales and marketing said in an interview.
Medina Capital was started by Manny Medina, the former chief executive of Terremark, a data center company that was sold to Verizon in 2011.
Verizon is close to divesting its data center portfolio that includes Terremark to Equinix Inc, Reuters has reported.
BofA Merrill Lynch, Morgan Stanley and Wells Fargo Securities were CenturyLink's financial advisers while LionTree Advisors provided financial advice to BC Partners and its consortium investors.
(Reporting by Supantha Mukherjee and Aishwarya Venugopal in Bengaluru; Editing by Martina D'Couto, Bernard Orr)