Zayo Sells zColo Data Center Colocation Assets to DataBank

DataBank, a U.S. provider of enterprise-grade colocation, connectivity, and managed services, has acquired zColo, the data center colocation business unit of Zayo Group. This includes certain U.S. and European data center assets. The zColo acquisition brings to DataBank an additional 44 data centers including 13 key interconnect locations across 23 markets in the U.S. and Europe. 

The transaction creates one of the largest privately held data center operators in the US. It positions DataBank as a “leading” provider of edge colocation and connectivity solutions to hyperscale, technology and content customers across the US. DataBank will own and manage the sites, in which Zayo will remain a key anchor customer to provide network connectivity solutions for its customers.

“This agreement allows both parties to focus on their core strengths,” said Dan Caruso, CEO of Zayo Group. “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.”

Fiancial terms of this acquisition were not disclosed. The closing of the deal is subject to customary conditions and regulatory approvals. The transaction is anticipated to close by year-end 2020.

The transaction is being funded by an investor group led by Colony Capital (NYSE: CLNY), 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.

Annual Revenue: $450 Million

In addition to growing DataBank’s geographic footprint to a national scale in strategically important data center markets in the US, zColo would contribute a solid base of diversified, blue-chip customers that complement DataBank’s existing relationships. These organizations might benefit from DataBank’s service framework and operations which will expand to include the following:

  • 64 data centers in 29 markets (up from 20 data centers and 9 markets)
  • Over 3,000 customers including many Fortune 100 and leading cloud and content providers
  • Pro forma annual revenue of over $450M
  • 1.1M raised square feet of data center space
  • 141 MW of installed UPS capacity
  • Over 30,000 network cross-connects
  • 18 major network interconnection points
  • 12 cloud nodes
Raul K. Martynek
“We look forward to integrating zColo into our data center portfolio while elevating our existing level of service to meet the increasingly diverse workloads of our enterprise customers,” said Raul K. Martynek, CEO of DataBank.

The transaction would also significantly accelerate DataBank’s edge and hybrid cloud strategies. The expanded data center footprint provides DataBank’s customers with new geographic options for co-locating their content, data and workloads closer to end-user populations in key markets like Los Angeles, Denver, Chicago, Miami, Boston and New York City. With double the number of private cloud nodes and public-cloud on-ramps, DataBank customers will have more flexibility to design hybrid IT solutions that adapt as their infrastructure needs evolve.

“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,” said Raul K. Martynek, CEO of DataBank. “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.”

Network Hubs and Carrier Hotels

Having assembled one of the densest metro and long-haul fiber networks in the U.S., Zayo’s data center assets also bring to DataBank a set of “valuable” network hubs and carrier hotel facilities. This would make it one of the largest providers of network-neutral interconnections and add diversity and performance to the DataBank footprint.

Zayo Group will become a significant customer and continue to be an anchor tenant within the zColo colocation facilities. DataBank customers would benefit from access to Zayo’s global fiber network, enabling companies to get their data anywhere in the world. With a long-term agreement in place, the companies expect to collaborate closely in bringing colocation solutions to Zayo’s fiber customers and private fiber network solutions to DataBank’s colocation and cloud customers.

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