Iron Mountain in $128m bid for Denver colocation firm Fortrust
07 August 2017 | Jason McGee-Abe
Iron Mountain has agreed to purchase Mag Datacenters, which operates private data centre and colocation business, Fortrust, for a total consideration of approximately $128 million.
The transaction expands the company’s footprint into the western US data centre market and supports its strategic plan.
Fortrust’s data centre operations comprised a state-of-the-art facility totalling 210,000 sq ft of space, including 71,000 rentable sq ft of colocation space. The existing space provides approximately 9MW of data centre capacity, 75% of which is leased to a diversified base of 250 customers.
It provides Iron Mountain with expansion potential within Fortrust’s existing facility of approximately 38,000 rentable sq ft of colocation space that will support another 7MW of high-density capacity.
“We are excited by the potential this transaction with Iron Mountain represents, giving our customers access to a larger portfolio of locations and services while still receiving the highest level of customer service and operational quality Fortrust has delivered for over 15 years,” said Steven Knudson, CEO of Fortrust.
Fortrust, which has operated in the Denver market for 15 years, is a leading provider of multi-tenant data centre space in the Colorado/Mountain region and owns one of the nation’s first Tier III Gold colocation data centres. It also enjoys a strong regional presence while also serving as a critical location for customers seeking East-West data centre redundancy.
Mark Kidd, senior vice president and general manager of Iron Mountain data centres, said: “Iron Mountain has operated in the data centre business for more than 20 years and delivered consistent, solid internal growth. With this acquisition – our first in the data centre business – we are expanding our network to better serve target customers for whom our reputation for enhanced security, customer service and compliance are important factors in data centre selection. This acquisition, together with Phase I of our Northern Virginia campus, will bring total capacity to more than 30MW with the ability to expand to more than 70MW across our data centre properties.”
The company intends to fund the purchase with a combination of approximately $73.5 million from a private placement of stock to the seller and $54.5 million in cash. The stock will be unregistered and subject to restrictions on resale under Rule 144 of the Securities Act. The company projects a stabilised return of in the mid-teens following build-out and lease-up of the expansion capacity. The company expects earnings per share dilution of $0.01 to $0.02 in 2017 and for the acquisition to be accretive in 2019 following integration.
“Our expanded geographic platform and deep customer relationships within both our data centre and data management businesses will accelerate our momentum in this attractive business,” added Iron Mountain president and CEO William L. Meaney.
“We continue to see opportunities to expand our business through strong organic growth, new development and acquisition. Together with our existing data centres and completion of the first phase of our Northern Virginia data centre campus next month, this acquisition will strengthen the foundation of a long-term growth engine and help accelerate the growth in our adjacent businesses.”
The transaction is subject to customary closing conditions and anticipated to be completed prior to the end of Q3.
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