Contact: Mark Fontecchio
CyrusOne enters one of the top North American datacenter markets with the $400m purchase of Cervalis. The target has four enterprise-quality, multi-tenant datacenters (MTDCs) in the New York/New Jersey region that total a half-million gross square feet of space. As we reported in a recent in-depth analysis of the metro New York MTDC market, the region has been driven by financial services firms and connectivity. This deal hits both bullet points – about two-thirds of Cervalis’ 220 customers are in financial services, and it provides interconnected datacenters in one of the largest Internet hubs of New York City.
At 5.7x trailing revenue, the price tag is two turns higher than the median on North American hosting transactions since 2014. Why? Location, location, location – the NY/NJ market is one of the most highly sought. The acquisition is also a shot across the bow to anyone who thought that North American datacenter consolidation was nearing completion. According to 451 Research’s M&A KnowledgeBase, datacenter consolidation in the region has shot back up this year: deal volume is up 36% and is on pace to match 2013’s totals. Deal value is also set to jump 2.5x and hasn’t been skewed by any oversized transactions like 2013 was with IBM’s $2bn reach for SoftLayer.
Morgan Stanley and Allen & Company advised CyrusOne, while DH Capital banked Cervalis. We’ll have a full report on this acquisition in tomorrow’s 451 Market Insight.
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