M&A, Finance and Other News in Hosting and Colocation

Mergers and Acquisitions News

• Equinix to Buy Telecity for $4.1 Billion. U.S. data centre company Equinix Inc said on Friday it had agreed to buy British peer Telecity Group in a deal worth 2.35 billion pounds ($3.60 billion), creating the largest data centre player in Europe. Equinix said the deal would see each Telecity Group shareholder receive 572.5 pence in cash for each share as well as 0.0327 new Equinix Shares, a 27.3% premium to the firm’s closing price on May 6 before talks were announced. (Reuters – May 29)

• Daisy Makes £180 Million Bid for Phoenix IT in UK Market Consolidation Play. Acquisitive B2B technology and communications player Daisy Group bid 160 pence per share for AIM-listed Phoenix IT Group valuing the services operation at around £180 million including its equity market capitalization and net debt. Talk of a deal has rumbled along for more than a year but with Phoenix in the middle of a three-year turnaround plan under the latest CEO and no longer reporting steep losses, a rising market cap was thought to be a potential stumbling block. (The Channel Register – May 21st)

• Acxiom to Sell IT Infrastructure Management Business for up to $190 Million. Acxiom agreed to sell its IT Infrastructure Management business (Acxiom IT) to Charlesbank Capital Partners and M/C Partners for total cash consideration of up to $190 million. “In the last three years, we have taken a number of steps to tighten our strategic direction,” said Acxiom CEO Scott Howe. “This transaction represents the next phase in our journey to focus Acxiom on growing its core Marketing and Data Services business, and extending its leadership in onboarding and connectivity.” (Acxiom – May 20th)

• ConvergeOne Acquires Mountain States Networking. ConvergeOne acquired Mountain States Networking, a Cisco Gold Certified Partner and leading network solutions provider in the western United States. “This acquisition is consistent with ConvergeOne’s ongoing strategy to provide best-of-breed solutions across all of the leading technology platforms,” said John A. McKenna Jr., Chairman & CEO of ConvergeOne. “The addition of Mountain States Networking to the ConvergeOne family enables us to deliver even more value.” (Digital Journal – May 20th)

• All Covered Acquires Houston-Based Techcess Group. All Covered, the IT Services division of Konica Minolta Business Solutions, acquired Techcess Group. The company’s clients will now be serviced by All Covered, giving All Covered a significantly larger footprint in Texas and greatly increased scope of innovative services, such as cloud computing and mobility solutions. “Techcess has an outstanding reputation both in Texas and nationally for providing customers with best- in-breed IT solutions,” said Todd Croteau, President of All Covered. (All Covered – May 12th)

• TekLinks Acquires Claris Networks. IT solutions provider TekLinks acquired Claris Networks in a deal that strategically increases its presence in the eastern Tennessee market and significantly increases the size of the company’s managed services business. Established in 1998 and headquartered in Knoxville, TN, Claris Networks is a privately-owned provider of advanced IT services including cloud, managed healthcare IT, and strategic consulting to small and mid-sized businesses in Nashville, Chattanooga, and Knoxville, TN. (TekLinks – May 12th)

• QTS Realty Trust to Acquire Carpathia Hosting for $326 Million. QTS agreed to acquire Carpathia Hosting, a leading hybrid cloud services and Infrastructure-as-a-Service (IaaS) provider offering a high level of security and compliance solutions to sophisticated enterprise customers and federal agencies. The terms of the agreement call for QTS to purchase Carpathia for $290 million and to assume $36 million of capital lease obligations for a total enterprise value of $326 million. Carpathia is expected to contribute $32 million in annualized Adjusted EBITDA to QTS. (QTS – May 6th)

• vXchnge Extends Reach with Acquisition of Eight Data Centers from Sungard AS. vXchnge acquired eight data centers from Sungard Availability Services. The acquisition is consistent with vXchnge’s strategy to acquire high-quality assets which support existing and new customer deployments in markets across the U.S. “We see tremendous opportunities directly tied to this transaction. It accelerates our strategic presence in edge-based marketplaces for companies to grow their businesses,” said Keith Olsen, Chief Executive Officer of vXchnge. vXchnge now operates in 15 markets in the U.S. (vXchnge – May 4th)

• Carlyle Group Acquires Telvent Global Services. The Carlyle Group announced the acquisition of Telvent Global Services. Headquartered in Madrid, and employing more than 400 people, Telvent Global Services provides information technology (IT) infrastructure management services, including the provision of hosting across five data centers located in Spain and Portugal. The company also offers advanced hybrid Cloud platform capabilities in addition to providing broader value-added solutions for industrial cyber security and advanced IT management. (Carlyle Group – May 5th)

• Iron Mountain Announces Agreement to Acquire Recall Holdings. Iron Mountain agreed to acquire Recall Holdings, a global information management company offering enterprises solutions that provide complete visibility and control over their digital and physical assets. The combined company’s broader footprint, stronger infrastructure and increased economies of scale will enable Iron Mountain to better serve its customers and address unmet document storage and information management needs around the globe. (Iron Mountain – April 28th)

• Crown Castle Acquires Quanta Subsidiary Sunesys for $1 Billion. Crown Castle agreed acquire Sunesys, a bandwidth infrastructure provider with 10,000 route miles of fiber in major metro markets, including Los Angeles, Philadelphia, Chicago, Atlanta, Silicon Valley, and Northern New Jersey. This deal marks the third fiber network pureplay acquisition by Crown Castle as the company acquires core network assets to further its small cell and DAS strategy. The $1 billion purchase price is equal to about 16.0x Adjusted EBITDA projected under Crown Castle’s ownership. (Crown Castle – April 30th)

• CyrusOne Acquires Cervalis for $400 Million. CyrusOne agreed to acquire Cervalis for $400 million in a transaction that will add four Tier 3+ data center facilities and two standalone work area recovery facilities serving the New York metropolitan region into CyrusOne’s existing data center platform. The Cervalis facilities currently comprise more than 500,000 gross sq. ft. of space, including more than 125,000 colocation sq. ft. and over 100,000 sq. ft. of work area recovery space. In 2014 Cervalis generated revenue of nearly $70 million. (CyrusOne – April 28th)

• Reuters Reports Telx is Exploring $2 Billion Sale. Reuters reported that Telx is exploring a sale that could value it at around $2 billion, citing unnamed sources familiar with the matter. Telx manages 1.3 million sq. ft. of data center space and more than 50,000 network connections. The company is just the latest data center operator to hit the auction block. Zayo bought data center company Latisys in February for $675 million, while AT&T has been pursuing a sale of its data centers worth $2 billion. (Reuters – April 28th)

• Amazon Acquires ClusterK to Help Users Spot Cloud Savings. Amazon acquired Palo Alto-based software company ClusterK last week for a reported $20-$50 million. ClusterK optimizes Amazon Web Services (AWS) infrastructure and helps significantly lower the cost of compute. As public cloud providers continue to drop prices to stay competitive, AWS will integrate ClusterK’s technology into its EC2 Spot Instances in order to offer instances at a fraction of the price, according to a report by VentureBeat. (The WHIR – May 1st)

Financing News

• CIT Group Leads $90 Million Acquisition Financing for vXchnge. CIT announced that it served as sole lead arranger and administrative agent in a $90 million senior secured credit facility to support vXchnge’s acquisition of eight data centers from Sungard Availability Services. vXchnge is a portfolio company of The Stephens Group, a private equity firm located in Little Rock, AR. “The acquisition of these eight data centers expands our footprint to 15 data centers,” said Keith Olsen, Chairman and Chief Executive Officer of vXchnge. (vXchnge – May 11th)

• Cloud Application Delivery Provider Instart Logic Nets $43 Million for Expansion. Silicon Valley startup Instart Logic landed a $43 million expansion funding round. The company continues to build a patent portfolio for its technology that it calls Software-Defined Application Delivery platform (SDAD).Instart Logic hopes this intelligent software will disrupt the traditional content delivery network (CDN) market through showing its approach solves performance challenges inherent in wireless connections making content delivery networks obsolete. (Data Center Knowledge – May 14th)

• Steadfast Closes $4.1 Million Debt Financing to Drive Growth. Steadfast, a provider of private and public cloud hosting, colocation, disaster recovery and managed services, has successfully completed $4.1 million in debt financing. The financing agreement will help propel long-term growth for Steadfast and demonstrates the company’s steady success over the last 17 years. The company is focused on continued growth, including the expansion of large-scale enterprise private cloud and managed server deployments. (PRWeb – May 14th)

• Carbonite Announces $20 Million Share Repurchase Program. Carbonite, a leading provider of cloud and hybrid business continuity solutions for small and midsize businesses, announced a share repurchase program for up to an aggregate of $20 million of the company’s outstanding common stock. Pursuant to the stock repurchase program, which is designed to return value to Carbonite’s shareholders, the company will repurchase shares from time to time on the open market or in privately negotiated transactions through May 2018. (Carbonite – May 14th)

• Cloud Communications Technology Company Twilio Raises $100 Million. Twilio is the latest tech startup to join the ranks of private companies worth at least $1 billion after quietly raising a $100 million round of funding. Twilio provides cloud communication infrastructure to businesses so they can interact quickly and safely with their own customers. Enterprise collaboration company Box has built a two-factor authentication on Twilio, while Home Depot uses the Twilio client to communicate with customers finding technicians over its Redbeacon unit. (Forbes – May 4th)

• Communications Sales & Leasing Commences Trading. Windstream’s network REIT spin-off Communications Sales & Leasing commenced trading on the NASDAQ under the symbol CSAL. It closed the week at $29.97 per share with an equity value of $4.5 billion and an enterprise value of $8.0 billion equal to approximately 11.8x pro forma 2014 EBITDA. With a relatively highly valued currency in contrast to Windstream, CS&L is expected to be an active acquiror of bandwidth infrastructure assets as it looks to grow and diversify its customer base. (CS&L – May 1st)

• CoreSite Realty Announces Sale of Common Stock by the Carlyle Group. CoreSite announced the sale of 4.5 million shares of its common stock by The Carlyle Group to Jefferies and Citigroup as the underwriters in connection with the offering. The company recently reported 1Q15 results, highlighted by revenue of $74.8 million, representing a 17.3% increase year-over-year. 1Q15 funds from operations (FFO) were $0.64 per diluted share and unit, representing 25.5% growth year-over-year, excluding non-recurring items in Q1 2014. (CoreSite – April 27th)

• One.com Receives Growth Equity Investment from Accel-KKR and ATP. One.com, Europe’s leading provider of web hosting services and domain names, announced that Accel-KKR and ATP Private Equity Partners completed a growth equity investment in the company. This investment will support One.com’s launch into the U.S., its ongoing product innovation and the acceleration of its growth in new regions in Europe. One.com has over 1.3 million customers supported across Europe. Terms of the investment were not disclosed. (Blackbird PR News – April 28th) Rocana Lands $15 Million to Bring Big Data Analysis to IT Ops

• Rocana announced $15 million in Series B funding led by Google Ventures with General Catalyst Partners, Toba Capital and Paul Sagan, former chairman at Akamai and current executive in residence at General Catalyst, also contributing. This round brings the total raised to $19.4 million. Rocana aims to simplify and speed up how companies running large data center operation teams track and fix issues across their systems. (TechCrunch – May 1st)

• StarTek Signs New $50 Million Credit Facility with BMO Harris Bank. StarTek signed a new five-year $50 million secured revolving credit facility with BMO Harris Bank. The amount available under the revolving credit facility is subject to a borrowing base calculation, with an “accordion” feature to borrow up to $70 million. The facility will replace StarTek’s $20 million secured line of credit with Wells Fargo, which was set to expire in 2016. Under the new agreement, the interest rate on borrowings will decrease from LIBOR plus 2.50%-3.00% to LIBOR plus 1.75%-2.25%. (StarTek – April 30th)

• Docker Raises $95 Million Series D Round for its Technology Platform. Docker, the company that kicked off the recent enthusiasm for containers two years ago, announced that it has raised a $95 million Series D round led by Insight Venture Partners. New investors in this round include Coatue, Goldman Sachs and Northern Trust. Currently, Docker is investing heavily in its go-to-market strategy, but also in the technology stack where it plans to expand the platform’s capabilities with a focus on networking, security and storage tools around its service. (Tech Crunch – April 14th)

• Network Security Company Illumio Raises $100 Million in Growth Equity. Illumio closed a $100 million Series C financing, bringing the company’s total investment to more than $142 million. Participating in the round are new investors BlackRock Funds and Accel Partners, joined by existing venture investors Formation 8, Andreessen Horowitz and General Catalyst. Illumio will use the new funding to meet demand for its Adaptive Security Platform, invest in R&D to drive additional platform expansion, grow its sales and marketing efforts, and fuel international expansion. (Illumio – April 14th)

• Engine Yard Buys Open Source Cloud Platform OpDemand. Engine Yard, a startup that offers a platform-as-a-service (PaaS) cloud developers can use to build and run apps, acquired OpDemand, a startup that created open-source PaaS tool Deis. “By joining forces with Engine Yard, Deis will continue to flourish as an open source project and community. As Engine Yard helps the project to evolve, Deis will remain the best way to deploy and manage distributed applications in production,” said OpDemand CTO and Deis creator Gabriel Monroy. (Venture Beat – April 14th)

• General Dynamics Sells Fidelis Cybersecurity Unit to Marlin Equity. Aerospace and defense company General Dynamics is selling its Fidelis security unit to private equity firm Marlin Equity Partners. Based in Waltham, MA, Fidelis is currently part of the mission systems division of General Dynamics, and offers data protection services from network security and cyber threat intelligence, to data breach investigation and response. Marlin has a diversified portfolio comprised of technology, healthcare, consumer services, and manufacturing companies. (DatacenterDynamics – April 16th)

Other News

• Zynga Ditches Data Center Plans for AWS. Zynga will shut its data centers and shift workloads back to Amazon, two years after the company spent $100 million to build out its own data centers. Zynga appeared to be a business that could potentially “outgrow” cloud, in the sense that once a company reaches a certain scale, it begins to make sense to build your own data centers. But, for Zynga to run its own data centers, it meant a mad scramble to provision servers and power during big releases, followed by lulls. (Data Center Knowledge – May 12th)

• Google Moves its Corporate Applications to the Internet. The Wall Street Journal reported that Google is moving all of its internal corporate applications to a cloud model. So far, 90% of Google’s corporate applications have migrated. With that shift to cloud comes a shift in the way the company approaches and thinks about security. Gone is the idea of the cordoned-off enterprise. Called the BeyondCorp initiative, the new security model assumes that the internal network is as dangerous as the Internet. (The WHIR – May 15th)

• Internet of Things to Spur Data Center Demand Explosion. While the tiniest of devices come to mind when thinking about the Internet of Things, the fact that the already massive amount of tiny network-connected devices is growing relentlessly will have serious implications for huge buildings where servers those devices talk to live. Only about four years from now, the Interned of Things will need 750% more data center capacity in service-provider facilities than it consumes today, according to a recent report by the market-research firm IDC. (Data Center Knowledge – April 27th)

• DigitalOcean Becomes Second Largest Hosting Company. DigitalOcean has grown to become the second-largest hosting company in the world in terms of web-facing computers, and shows no signs of slowing down. The virtual private server provider has shown phenomenal growth over the past two-and-a-half years. First seen in Netcraft’s December 2012 survey, DigitalOcean now hosts more than 163,000 web-facing computers according to Netcraft’s May 2015 Hosting Provider Server Count. This gives it a small lead over French company OVH. (Netcraft – May 1st)

• mindSHIFT Expands Flagship Data Center on Long Island. Managed services supplier mindSHIFT Technologies will enlarge its current data center at Commack, NY with a multi-year lease agreement to add data center and office space. mindSHIFT specializes in IT outsourcing and cloud services for small and medium-sized businesses (SMBs) and is owned by Japan-based Ricoh, the document services giant. Investment in the data center expansion is the latest move in Ricoh’s strategy to grow its IT services portfolio. (DataCenterDynamics – April 30th)