DataBank, a provider of enterprise-class colocation, connectivity and managed services, signed definitive agreements to acquire zColo, including certain U.S. and European data center assets, from Zayo Group Holdings. The zColo acquisition brings to DataBank an additional 44 data centers, including 13 interconnect locations across 23 markets in the U.S. and Europe.
The transaction is being funded by an investor group led by Colony Capital, DataBank’s controlling shareholder, which includes Nuveen Real Estate and others. In addition to leading a consortium of institutional investors to support the acquisition, Colony Capital is investing $145 million from its balance sheet to maintain its 20% stake in DataBank. Debt financing associated with the transaction has been underwritten by TD Securities, Truist Securities and Société Générale, which are acting as joint lead arrangers and joint bookrunners for the new credit facility.
DH Capital served as financial advisor to DataBank in connection with the transaction and Jones Day served as legal counsel. JP Morgan acted as financial advisor to zColo and Skadden Arps served as legal advisor.
The closing of the deal is subject to customary conditions and regulatory approvals. The transaction is anticipated to close by year-end 2020.
zColo will contribute a base of customers that complement DataBank’s existing relationships. In addition, DataBank’s service framework and operations will expand to include the following:
- 64 data centers in 29 markets (up from 20 data centers and nine markets)
- More than 3,000 customers, including some Fortune 100 and cloud and content providers
- Pro forma annual revenue of more than $450 million
- 1.1 million raised square feet of data center space
- 141 MW of installed UPS capacity
- More than 30,000 network cross connects
- 18 major network interconnection points
- 12 cloud nodes
The transaction also accelerates DataBank’s edge and hybrid cloud strategies. The expanded data center footprint provides DataBank’s customers with new geographic options for colocating their content, data and workloads closer to end-user populations in markets like Los Angeles, Denver, Chicago, Miami, Boston and New York City.
“Simply put, this highly complementary acquisition will allow us to serve customers better. The strategic rationale is fully aligned with our core ‘Data Center Evolved’ strategy built around providing customers broad geographic reach as they move their content and applications closer to the edge,” Raul K. Martynek, CEO of DataBank, said. “We look forward to integrating zColo into our portfolio while elevating our existing level of service to meet the increasingly diverse workloads of our enterprise customers.”
Zayo’s data center assets also bring to DataBank a set of network hubs and carrier hotel facilities. Zayo will become a customer and continue to be an anchor tenant within the zColo facilities. DataBank customers will have access to Zayo’s global fiber network. With a long-term agreement in place, the companies expect to collaborate in bringing colocation solutions to Zayo’s fiber customers and private fiber network solutions to DataBank’s colocation and cloud customers.
“This agreement allows both parties to focus on their core strengths,” Dan Caruso, CEO of Zayo, said. “We’ll continue building the most fiber-rich digital infrastructure in the world while DataBank focuses on hosting the innovations and digital workloads that our fiber and network infrastructure were designed to fuel.”