Bell Canada Buys Q9 Networks for $1.1 Billion

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The interior of a Q9 Networks data center. The Toronto-based provider is being acquired by Bell Canada and a team of investors.

Bell Canada is partnering with a group of investors to buy data center provider Q9 Networks for $1.1 billion Canadian ($1.06 billion US), the company said today. It’s the latest in a series of deals in which telcos have bought up data center companies to expand into the growing market for cloud computing services.

The deal is also a huge win for private equity firm ABRY Partners, which bought Q9 Networks in 2008 for $361 million. The transaction marks the second time ABRY has acquired a data center provider and sold it to a telecom provider for a substantial premium, a model previously followed in ABRY’s  2007 purchase of Texas provider CyrusOne, which it sold to Cincinnati Bell in 2010 for $525 million. The deals provide compelling examples of why private equity firms have been focused on investments in the data center industry.

Q9 Networks has 11 data centers in the Toronto area, Calgary and British Columbia. The company will continue to be headquartered in Toronto and operate as a stand-alone entity under its new ownership. Existing Q9 management will continue operating the company, including Chief Executive Officer Osama Arafat and President & Chief Operating Officer Paul Sharpe.

Bell Canada teamed with an investor group including the Ontario Teachers’ Pension Plan and private equity investors Providence Equity Partners and Madison Dearborn Partners. The investor will contribute $420 million of the equity portion of the deal, with Bell Canada providing $180 million.

“Q9 is a recognized leader in data centre services for business customers large and small, an ideal partner to grow our hosting and cloud-based business while leveraging our world-leading broadband network infrastructure,” said Tom Little, President of Bell Business Markets. “Bell looks forward to working with our partners and to offering our national business customer base access to Q9′s hosting and co-location services while delivering Bell’s broadband network solutions to Q9′s extensive client roster.”

“Q9 looks forward to working with these leading private-equity firms and Canada’s largest communications company, all of which have a strong track record of growing leading-edge companies like Q9,” said Osama Arafat, CEO of Q9 Networks. “They recognize the value of Q9 and its team, an exceptional Canadian company dedicated to providing organizations with highly secure and reliable data centre infrastructure services.”

About the Author

Rich Miller is the founder and editor at large of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.

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4 Comments

  1. Chris

    "in a series of deals in which telcos have bought up data center companies to expand into the growing market for cloud computing services." Not quite. I suppose this is the hype of the cloud. As a current and long time customer of Q9, I can say that their cloud offering is neither traditional nor one of their base (from an income perspective) products. Q9 is best known as a top tier colo and as you take a tour, one would see that.

  2. Rick Devan

    On a side note, I don't think Bell leverages very well this acquisition, at least on their website http://www.bell.ca/enterprise/EntPrd_Inf_Landing.page there is no mention of Q9...

  3. Mike Charles

    I can't find anything about the Q9 in www.bell.ca/enterprise/EntPrd_Inf_Landing.page either, but I find it very cool, even better, that they concentrate on giving information about the Cloud and data management through white papers & webinars so that people can make an informed decision