CyrusOne to Buy Zenium Data Centers, Expanding in Europe in a Big Way

CyrusOne is expanding into Europe in a big way.

The company announced Thursday an agreement with the private investment fund Quantum Strategic Partners to acquire Zenium Data Centers, which caters primarily to hyper-scale clients and operates massive data centers in London and Frankfurt – Europe’s two largest data center markets.

Dallas-based CyrusOne, one of the largest data center providers in North America, has agreed to pay $442 million for Zenium – an 18x multiple of the European data center company’s annual EBITDA from all currently signed leases (commenced and otherwise). Quantum is managed by Soros Fund Management.

December has been an acquisition-heavy final month of an acquisition-heavy year in the data center provider industry. Earlier this month, Iron Mountain announced a $1.3 billion deal to acquire IO Data Centers’ US business, and Equinix announced it will buy Metronode, one of the largest data center providers in Australia, for about $790 million. Another deal may be in the works but likely will not materialize until next year. Infomart Data Centers is considering a sale, according to a report by The Wall Street Journal this week that cited anonymous sources.

CyrusOne executives have been talking about international expansion for some time now but started taking concrete steps this quarter. In October, the company announced a $100 million investment in the Chinese data center provider GDS Holdings.

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The latest deal will not be CyrusOne’s first foray into Europe -- company has had a data center in the London market for several years – but it does represent a substantial ramp-up of its European business.

Zenium has two data centers in London and two in Frankfurt. About 9MW of capacity is leased in London, representing about 40 percent of the facilities’ full potential, and 17MW in Frankfurt, representing 65 percent of full build-out capacity. Together, the leases generate about $25 million in EBITDA annually.

The European provider has more than 10 customers, about three quarters of whom are hyper-scale platforms, CyrusOne said in a statement. More than half of those customers will be new to the American company. The term “hyper-scale” is typically applied to companies that operate application platforms at global scale, companies like Facebook and Amazon.

Hyper-scale clients have been a particular strategic focus for CyrusOne, driving much of its business growth in the US and playing a major role in its GDS investment in China. Like Zenium in Europe, GDS is a major data center landlord for hyper-scalers in China.

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Over the next 18 months, companies will more than double the amount of data center capacity they leased in Europe in the previous 18 months, according to CyrusOne. The provider expects particularly strong demand for larger deployments, which are its specialty.

At full build-out, the Zenium portfolio in Germany and the UK is expected to reach more than 260,000 square feet of colocation space and nearly 50MW of power. Only about half of that capacity is currently leased, leaving CyrusOne with a lot of inventory in Europe.