Iron Mountain in $1.3 bn deal to buy IO Data Centers

Iron Mountain for CIOsIron Mountain is set to acquire the U.S. operations of IO Data Centers, a colocation data center services provider based in Phoenix, Arizona, for $1.315 billion.

Iron Mountain will acquire four data centers in Phoenix and Scottsdale, Arizona; Edison, New Jersey; and Columbus, Ohio — as part of the cash transaction.

The existing data center space in the four owned facilities totals 728,000 square feet, providing 62 megawatts (MW) of capacity with expansion potential of an additional 77 MW in Arizona and New Jersey.

Iron Mountain earlier announced the acquisition of FORTRUST data center and two Credit Suisse data centers in London and Singapore.

Iron Mountain’s data center presence will increase to more than 90 MW, with an additional 26 MW of capacity currently under construction and planned and future expansion potential of another 135 MW.

“Our strategy includes organic expansion within our existing footprint, greenfield development in the largest U.S. markets such as our newly opened campus in Northern Virginia, and targeted acquisitions of properties with customer profiles that closely mirror our own,” said Iron Mountain CEO William L Meaney.

Iron Mountain aims to accelerate growth profile by bringing data center business to approximately 7 percent of total revenue and approximately 10 percent of Adjusted EBITDA by 2020.

IO has more than 550 data center customers including financial services, aerospace, federal government and technology companies among its Top 10, with no single customer representing more than 10 percent of total revenue.

IO Phoenix Campus has data center capacity of 38 MW. IO Scottsdale data center capacity is 7 MW. IO New Jersey Campus data center capacity is 15 MW. IO Ohio data center capacity is 2 MW.

The consideration of $1.315 billion represents a multiple of 15x synergized 2018 EBITDA, post integration. The company expects the transaction to accelerate its revenue and Adjusted EBITDA growth.

Iron Mountain is on track to reduce its lease adjusted leverage ratio to approximately 5x, and lower its dividend payout as a percentage of Adjusted Funds From Operations to 70-75 percent, assuming annual dividend per share growth of approximately 4 percent.