Private equity firm GI Partners has signed a definitive agreement to acquire IT infrastructure and cloud provider Peak 10, Inc. from investor Welsh, Carson Anderson & Stowe, the companies said today. Terms of the deal were not disclosed, but a report from Reuters last week said market rumors valued the deal at between $800 million and $900 million.
“This is a pivotal time in the IT infrastructure space,” said David Jones, President and Chief Executive Officer of Peak 10. “Our industry continues to experience dynamic change with shifts and enhancements to virtual environments and the promise of the cloud. GI Partners’ deep experience in value creation within our sector forms a strategic partnership that aligns with our aggressive plans to expand geographically and deliver new capabilities to the marketplace for companies who need a partner like Peak 10.”
Peak 10 operates 270,000 square feet of space in 24 data centers in 10 markets, primarily in the southeastern U.S., and has a history of calculated expansions. The Charlotte-based company has 2,500 customers, including GuideStar, the PGA of America and the Florida Panthers. Peak 10 has been around since 2000, safely navigating through the dotcom bubble as well as the major economic downturn in 2008.
How has the company survived, and even thrived? Historically it has followed a conservative game plan, choosing to focus on smaller, regional data centers rather than speculative builds. It staffs these regional data centers with local talent that knows the area, quickly establishing Peak 10 as a staple in local business communities. The company takes smart, calculated plays in markets showing potential.
Peak 10′s product strategy has evolved with the times, offering a unique mix of colocation, managed hosting, and most recently, cloud. It provides tailored solutions, often winning a piece of a customer’s IT infrastructure and further growing the relationship as time goes on.
“I think it will be interesting to see if GI Partners and Peak 10 is going to be active in follow-on acquisitions to either get more scale or specific capabilities, said Philbert Shih, Managing Director Structure Research. "Peak 10 has not been acquisitive of late but in the past has shown a willingness to acquire and add facilities, customers in geographies it prioritizes”.
GI Partners: A Veteran of Data Center Deals
GI has invested in seven other IT infrastructure businesses, including Digital Realty Trust (NYSE: DLR), The Telx Group, and SoftLayer Technologies. GI’s investment in Peak 10 will be made from GI Partners Fund IV, a private equity fund with $2 billion of capital commitments.
“This investment leverages GI’s long history of investing in technology infrastructure,” said Rick Magnuson, Founder and Executive Managing Director of GI Partners. “We see a significant value creation opportunity for businesses such as Peak 10, which form the backbone of the internet.”
“Peak 10’s talented and experienced management team has built an outstanding organization with considerable scale," said David Mace, Director at GI Partners. "We look forward to supporting the company as it continues to expand its leadership position.”
Completion of the transaction, which is subject to regulatory approvals and customary closing conditions, is expected in the second quarter of 2014.
Private equity firm Welsh, Carson, Anderson & Stowe acquired a majority stake in Peak 10 in 2010. Welsh Carson is a veteran investor in the data center industry, having previously owned positions in Savvis Communications, Amdocs Limited and and SunGard Data Systems.