DataBank and Zayo have completed the bigger part of their deal for the zColo data center business. Yesterday the two companies announced the finalization of DataBank’s acquisition of zColo’s business and assets in the US and the UK. The last remaining bit is zColo’s footprint in France, which won’t close until Q1/2021.
The transaction, which was originally unveiled at the end of September, augments DataBank’s footprint to 60 facilities in 28 markets spanning 1.1M square feet of raised floor space. Just what direction they take those assets in will be something to watch in 2021. The company also recently invested in EdgePresence, perhaps suggesting an interest further out on the edge.
Meanwhile, Zayo will focus on its fiber business under recently named CEO Steve Smith. Obviously they’ll also have a more significant relationship with DataBank given their extensive connectivity within the latter’s newly expanded footprint. I wonder whether the company has any other assets its new owners and leadership view as non-core.
This consolidation puts a significant amount of data center infrastructure more directly in the hands of Colony Capital, which invested another $145M to maintain its ownership stake in DataBank as part of the transaction. They were on both sides of this transaction of course, given their stake in Zayo alongside EQT. Meanwhile, TD Securities led the debt financing, which included $500M first and $100M second lien credit facilitites.
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Categories: Datacenter · Mergers and Acquisitions
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Will be interesting to see what Zayo do from here on out. They shed the units that weren’t really core to their business (and that they were not good at anyway), and shed some of the leadership that made them such a Charlie Foxtrot. Steve Smith is well-regarded as focused and progressive, but it will be telling of their aspirations to see what he does.
If the focus is on cost cutting and sheltering in place (generally thats private equity in a nutshell), they keep people like Waters and complex sales comp rules that keep them from having to pay out.
If they want to go after growth and innovation of their business, they will start with fixing their deeply broken culture and need to attract new talent that knows the space better than the new grads they get for bottom feeder dollars.
Waters has been gone since October. If Zayo shed all the parts of the business they were not good at, there would be nothing left. Steve Smith has a lot of work to do to fix Zayo- their delivery of service is horrible- always late, always wrong, always higher priced than competition. Their NCC stinks and they do not seem to know their own network.
Zayo doesn’t know their own network because it really isn’t their own network. It is just a lot of fiber stands purchased on IRU’s from the other carriers. They are lucky if they even know where the fiber actually is in the road. Zayo claims to have a great network, but as soon as there is a fiber cut, watch them call the other guys and then point fingers. Just a reseller without the strategic reach of a larger carrier.