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CyrusOne Buys European Data Center Zenium for 18X EBITDA


While most people spend this time of year shirking off work for holiday parties and last minute shopping, M&A activity within the channel is keeping a steady clip. The latest news is the purchase of Zenium Data Centers, a hyperscale European data center provider.

CyrusOne Inc, a global data center real estate investment trust (REIT), is acquiring Zenium for $442 million -- or roughly 18-times Zenium’s annualized adjusted EBITDA based on a range of factors. Quantum Strategic Partners is the seller. The deal is expected to close in the first quarter of 2018.

Dallas-based CyrusOne is one of North America’s largest data center providers, but the company isn't resting on its laurels. Other recent deals include two data centers from Sentinel Data Centers LLC for $490 million, and a $100 million investment in Chinese data center provider GDS Holdings.

CyrusOne: Expanding In Europe

CyrusOne has maintained a data center in London for a number of years, but the Zenium deal will increase its presence in the region. Zenium brings with it four properties in London and two in Frankfurt - the continent’s two largest data center markets

The REIT believes the European data center market is growing rapidly and a strong demand for larger deployments. “Establishing a significant European presence is a critical step in CyrusOne’s strategic objective of becoming a global provider,” the company said in a press release. The expansion will also help CyrusOne compete more effectively for opportunities from potential customers looking for a single provider with a geographically diverse presence, the company said.

CyrusOne says the local expertise will help with site selection and acquisition, data center development, and sales in the future. Zenium’s portfolio includes more than 10 customers with hyperscale companies representing nearly three-quarters of its contracted revenue.

“We are thrilled to join the CyrusOne team and believe that their unique capabilities and strong customer relationships, particularly among hyperscale companies, will accelerate growth across the existing European portfolio,” said Franek Sodzawiczny, Zenium’s founder and chief executive officer in a prepared statement. “We look forward to realizing the benefits of our combined expertise and similar operating philosophies as we continue to broaden CyrusOne’s footprint to capture growing European demand.”

Zenium’s hyperscale focus - a term usually applied to companies like Facebook or Amazon that operate application platforms on a global scale - will be a welcome addition for CyrusOne, which has been focusing on that segment of the market.

Hyper-scale clients have been a particular strategic focus for CyrusOne, driving much of its business growth in the US and playing a major role in its GDS investment in China. Like Zenium in Europe, GDS is a major data center landlord for hyper-scalers in China.