Document storage company, Iron Mountain, has made a deal to acquire a US data center business from IO Data Centers for $1.3 billion.
IO Data Centers owns four colocation data centers in the US — two in Arizona, one in New Jersey, and another in Ohio. A colocation is a data center facility in which a business can rent space for servers and other computing hardware. The IO Data centers provide access to large power networks for enterprises. It currently has 550 US customers across the financial services, aerospace, federal government, and technology sectors.
As part of the deal, Iron Mountain will acquire the land and buildings associated with the four data centers. The area of the four facilities totals 728,000 square feet, providing 62 megawatts (MW) of capacity with expansion potential of an additional 77 MW in Arizona and New Jersey, Iron Mountain said.
Boston-based Iron Mountain has made a significant push into the data center sector this year. In September, the company bought a 210,000 square-foot data center from Denver-based Fortrust, and it’s in the process of buying two Credit Suisse data centers in the London and Singapore markets.
Iron Mountain CEO, William Meaney, said the company expects its data center business to make up roughly ten percent of Adjusted EBITDA by 2020: “We continue to experience strong demand and growth in our data center business, with a focus on establishing a presence in the largest global markets for colocation and enterprise customers,” Meaney said. “The addition of IO’s data centers enhances our geographic diversification and provides market-leading exposure to Phoenix, the fourth fastest market for absorption in the U.S. in 2017, and the 12th largest data center market globally.”
Mark Kidd, SVP and GM of Iron Mountain’s data center business, added, “Importantly, this transaction also enhances our ability to support the needs of the largest cloud providers through new development with expansion capacity in Phoenix as well as New Jersey, another attractive market due to its proximity to the New York metro area.”
The transaction is expected to close next month and could include up to $60 million in additional payments based on future performance, the company said. These additional payments will, however, be subject to customary adjustments.