Subscribe To Our Daily Enewsletter:

Iron Mountain Buys IO Data Centers’ U.S. Operations

Iron Mountain is acquiring the U.S. operations of IO Data Centers. The total consideration of $1.315 billion, which does not include up to $60 million of potential additional payments, represents a multiple of 15x synergized 2018 EBITDA, post integration, the companies say.

That sounds expensive, considering most MSPs and IT services providers are valued somewhere between 5X and 7X annual EBITDA. Still, some larger IT service providers have fetched larger valuations — including Office Depot paying roughly 10X EBITDA for CompuCom.

Also, Iron Mountain is pointing to “synergized” EBITDA, which makes it sound like the company will realize cost synergies and/or economies of scale after the deal is completed. Dig into an SEC filing, and IO Data Centers had about $59 million in adjusted EBITDA for the year ended December 2016, and $50.9 million for the nine months ended September 2017.

The deal includes four IO Data Centers — located in Phoenix and Scottsdale, Arizona; Edison, New Jersey; and Columbus, Ohio. The total footprint spans 728,000 square feet, providing 62 megawatts (MW) of capacity with expansion potential of an additional 77 MW in Arizona and New Jersey, the companies said. The deal is expected to close in January 2018.

Iron Mountain has been acquiring data centers worldwide — including a FORTRUST deal in September 2017 and two two Credit Suisse data centers in the London and Singapore markets, the company noted.

Even as Amazon Web Services, Microsoft Azure and Google Cloud Platform consume more and more of the public cloud market, demand for additional capacity along with co-location knowhow from third-party companies appears strong.

Describing today’s IO Data Centers deal, Iron Mountain President and CEO William L. Meaney (pictured) said:

“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. Our strategy includes organic expansion within our existing footprint, greenfield development in the largest U.S. markets such as our newly opened campus in Northern Virginia, and targeted acquisitions of properties with customer profiles that closely mirror our own.”

After the latest acquisition, data centers should generate roughly 7 percent of Iron Mountain’s  revenues and 10 percent of adjusted EBITDA by 2020. Already, Iron Mountain has relationships with more than 30,000 North American data management customers. Roughly 550 of those customers come from the IO acquisition, and no single customer represents more than 10 percent of IO Data Center’s business.

Return Home

No Comments

Leave a Reply

Your email address will not be published. Required fields are marked *