Via Oak Hill, ViaWest expands

Contact: Ben Kolada, Jeff Paschke

In its first acquisition under new ownership, ViaWest announced today that it is buying three Salt Lake City datacenter facilities from Consonus Technologies. The transaction is the first in a line of expected deals after the company received a capital infusion from its sale to Oak Hill Capital Partners in April.

Financial terms weren’t disclosed; however, our analysts at Tier1 Research estimate that the transaction was in the range of $35-40m. The acquisition brings ViaWest’s total Salt Lake City datacenter count to six, and comes just three months after the vendor announced that it was adding 14,000 square feet to one of its existing Salt Lake City facilities.

Indeed, even at the high end of our estimated range, $40m may seem to be a bargain for three facilities with a combined total of 100,000 square feet of datacenter space. However, we would point out that ViaWest is not in the business of owning the shell building, but rather just the internal infrastructure (generators, switches and all furniture and fixtures). Its facilities are generally maintained on a long-term lease basis.

Under Oak Hill’s wing, we expect ViaWest to continue to acquire additional properties. (The firm inked three other deals under previous ownership, according to The 451 M&A KnowledgeBase.) Given its past acquisitions, ViaWest appears to prefer buying into new markets, rather than acquiring properties in markets where it already has a presence. As such, we don’t expect to see another market-consolidating play anytime soon. The company has a strong foothold in the western US – Salt Lake City follows Denver and Dallas as the firm’s third-largest market, in terms of usable datacenter space – but ViaWest executives have told us in the past that acquisitions will not necessarily be limited to the western states.