Iron Mountain to Acquire Denver Data Center Business for Approximately $130 Million; Transaction Expands Footprint into Western U.S. Data Center Market and Supports Company’s Strategic Plan
Iron Mountain Incorporated (NYSE: IRM), the storage and information management services company, has agreed to purchase MAG DATACENTERS, LLC, which operates FORTRUST, a private data center businesses for total consideration of approximately $128 million. The transaction would deliver more than 9 megawatts (MW) of existing data center capacity and provide expansion capability for an additional 7 MW.
FORTRUST is a leading provider of multi-tenant data center space in the Colorado/Mountain region and owns one of the nation’s first Tier III Gold colocation data centers. FORTRUST has operated in the Denver market for 15 years and enjoys a strong regional presence while also serving as a critical location for customers seeking East-West data center redundancy.
At June 30, 2017, FORTRUST’s data center operations comprised a state-of-the-art facility totaling 210,000 square feet of space, including 71,000 rentable square feet of colocation space. The existing space provides approximately 9 MW of power capacity, 75 percent of which is leased to a diversified base of 250 customers. FORTRUST’s top 25 customers represent approximately half of annualized revenue.
The acquisition will provide Iron Mountain with expansion potential within FORTRUST’s existing facility of approximately 38,000 rentable square feet of colocation space that will support another 7 MW of high-density capacity.
Mark Kidd, senior vice president and general manager, Iron Mountain Data Centers, said, “Iron Mountain has operated in the data center business for more than 20 years and delivered consistent, solid internal growth. With this acquisition – our first in the data center business – we are expanding our network to better serve target customers for whom our reputation for enhanced security, customer service and compliance are important factors in data center selection. This acquisition, together with Phase I of our Northern Virginia campus, will bring total capacity to more than 30 MW with the ability to expand to more than 70 MW across our data center properties.”
Steven Knudson, CEO of FORTRUST, said, “We are excited by the potential this transaction with Iron Mountain represents, giving our customers access to a larger portfolio of locations and services while still receiving the highest level of customer service and operational quality FORTRUST has delivered for over 15 years.”
The transaction is subject to customary closing conditions and anticipated to be completed prior to the end of the third quarter. The company intends to fund the purchase with a combination of approximately $73.5 million from a private placement of stock to the seller and $54.5 million in cash. The stock will be unregistered and subject to restrictions on resale under Rule 144 of the Securities Act. The company projects a stabilized return of in the mid-teens following build-out and lease-up of the expansion capacity. The company expects earnings per share dilution of $0.01 to $0.02 in 2017 and for the acquisition to be accretive in 2019 following integration.
“Our expanded geographic platform and deep customer relationships within both our data center and data management businesses will accelerate our momentum in this attractive business,” said Iron Mountain president and CEO William L. Meaney. “We continue to see opportunities to expand our business through strong organic growth, new development and acquisition. Together with our existing data centers and completion of the first phase of our Northern Virginia data center campus next month, this acquisition will strengthen the foundation of a long-term growth engine and help accelerate the growth in our Adjacent Businesses.”
Forward Looking Statement
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws and is subject to the safe-harbor created by such Act. Forward-looking statements include, but are not, limited to the anticipated closing of the acquisition. These forward-looking statements are subject to various known and unknown risks, uncertainties and other factors. When Iron Mountain uses words such as "believes," "expects," "anticipates," "estimates" or similar expressions, it is making forward-looking statements. Although Iron Mountain believes that its forward-looking statements are based on reasonable assumptions, Iron Mountain’s expected results may not be achieved, and actual results may differ materially from its expectations. In addition, important factors that could cause actual results to differ from Iron Mountain’s expectations include, among others Iron Mountain’s ability to close the proposed acquisition in accordance with its terms. Other risks described more fully in our filings with the Securities and Exchange Commission, including under the caption “Risk Factors” in our periodic reports or incorporated therein. You should not rely upon forward-looking statements except as statements of Iron Mountain’s present intentions and of its present expectations, which may or may not occur. Except as required by law, Iron Mountain undertakes no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
FORTRUST is one of the most progressive high-availability data center services providers in North America, serving clients across the globe who depend on colocation services for a critical lifeline of their business. FORTRUST was awarded a Tier III Gold Certification of Operational Sustainability and a Tier III Certification of Constructed Facility by Uptime Institute. FORTRUST Denver is the largest data center in the region. FORTRUST offers agile, reliable, sustainable and secure raised floor and modular data center capacity for any-size enterprise supported by optimal power infrastructure and connectivity to safeguard mission-critical business services. www.FTDC.com