Iron Mountain to buy IO data centres for $1.3 billion
Thu 14 Dec 2017
Iron Mountain has announced a commitment to purchase the U.S. data centre facilities from IO Data Centers LLC. Iron Mountain has agreed to pay $1.315 billion (approx. £1 billion), plus up to an additional $60 million based on future performance.
With the acquisition, Iron Mountain will take possession of four data centres in the U.S. located in Phoenix, AZ, Scottsdale, AZ, Edison, NJ and Columbus, OH. The four sites have a combined total of 728,000 square feet and 62 MW capacity, with the potential to expand to an additional 77 MW in the Arizona and New Jersey locations.
The latest purchase follows Iron Mountain’s data centre acquisition strategy, with the purchase of Fortrust and data centre properties from Credit Suisse earlier this year. When the Credit Suisse and IO acquisitions are closed early next year, Iron Mountain will own and operate 90 MW in existing data centre capacity, with another 26 MW currently under construction and an additional 135 MW planned for the future.
Mark Kidd, senior vice president and GM for Iron Mountain, noted that the geographic location of the IO data centres made it an attractive purchase for Iron Mountain. “The addition of IO’s data centres enhances our geographic diversification and provides market-leading exposure to Phoenix, the fourth fastest market for absorption in the U.S. in 2017, and the 12th largest data centre market globally,” he said.
Kidd also said that the IO data centre purchase supports Iron Mountain’s customers need for cloud services in Phoenix, and the New York City metro area which can be serviced by the Edison, NJ location.
The company issued a separate statement announcing that it has priced an offering of $825 million in notes, due 2028, to fund the purchase of the IO data centres. The notes will be combined with a common stock issuance of 14.5 million shares, to help make up the $1.315 billion purchase price of the IO data centres.
While the stock price of Iron Mountain dropped by 7% on the announcement of the funding manoeuvres required to make the IO acquisition, analysts believe that the price will rebound after a short adjustment period.