In a major M&A move in the data center space today, DataBank has announced a definitive agreement to acquire zColo from Zayo. I wondered if Zayo might step back into the M&A game now after EQT and Digital Colony took them private, but I didn't actually expect them to do so from the other side of the table. But of course Digital Colony is kind of on both sides of this particular table.
DataBank is acquiring zColo's assets and business, which brings them into 44 new data centers in 23 markets in both the USA and Europe. The combined company will operate some 64 data centers in 29 markets, serving some 3K customers and turning over some $450M in annual revenue (pro forma). For its part, Zayo will continue to do what it does in the fiber world of course, just without a data center arm in-house. They will instantly become one of DataBank's biggest network partners/tenants.
zColo was formed as the data center interconnection piece of Zayo's broader fiber infrastructure vision. They quickly built out data center space at key points on Zayo's fiber, always relatively close to the key interconnection points of a market and with dedicated, low latency connections over to them. Those buildouts were often funded by anchor deals with the content and cloud guys, often Google it is said. DataBank will take over that infrastructure, and thus become one of the largest players in this part of the edge data center market overnight.
The deal puts more of Digital Colony's data center assets under fewer umbrellas, as it owns a big piece of both DataBank and Vantage. Not mentioned in the announcement were details like the purchase price and such, but Colony Capital is investing some $145M to maintain its 20% stake in DataBank. That suggests it may have been some sort of equity deal, with EQT perhaps taking a stake in DataBank? I'm sure we'll know eventually. Debt financing has also been raised with the help of TD Securities, Truist Securities and Société Générale.
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