Cincinnati Bell Buys CyrusOne for $525M

Cincinnati Bell will buy colocation provider Cyrus One from its majority owner, ABRY Partners, in a cash transaction valued at approximately $525 million.

Rich Miller

May 12, 2010

2 Min Read
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Cincinnati Bell Inc. will buy colocation provider Cyrus One from its owner, ABRY Partners, in a cash transaction valued at approximately $525 million, the companies said today. CyrusOne will become a wholly-owned subsidiary of Cincinnati Bell (CBB) , retaining its brand and executive management team.

The acquisition of CyrusOne will be "transformative" for Cincinnati Bell's data center business, adding seven high-density data centers in Houston, Dallas, and Austin with a total of 163,000 square feet of capacity. The deal gives Cincinnati Bell's Technology Solutions segment a combined total of 609,000 square feet in 17 best-in-class facilities. The division currently has an annual run rate of $300 million.

"Data center services are a key strategic focus for Cincinnati Bell, allowing the company to provide next generation computing and communications services for our customers," said Jack Cassidy, president and chief executive officer of Cincinnati Bell. " "The addition of CyrusOne will transform our existing data center operations, particularly in the area of colocation services."

CyrusOne specializes in high-density colcoation services, with a strong focus in the energy and financial services sector. The company has rapidly expanded its data center network since being acquired by ABRY Partners in 2007.

In 2009 CyrusOne had revenue of $58 million, an increase of 86 percent from 2008, the companies said. Based on CyrusOne's unaudited first quarter results of 2010 annualized, the company would have annual revenue of $73 million for the full year, operating income of $27 million, and adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) of $42 million.

"Cincinnati Bell's commitment to invest growth capital in the data center market and demonstrated success in serving the technology needs of enterprises makes them an ideal match for CyrusOne," said Dave Ferdman, CyrusOne president and chief executive officer. "Our two companies share many common values including an intense focus on innovation and providing an exceptional customer experience. The combined companies will be better positioned to meet both our customers' growth needs."

"Many of CyrusOne and Cincinnati Bell Technology Solutions' larger enterprise customers have already indicated a desire to expand their data center colocation presence in the U.S. and ultimately globally," said Cassidy. "The combined data center footprint of our two organizations, strong reputation for operational excellence, and solid capital base will allow us to quickly gain the scale required to meet the needs of these customers. This in turn enables the customer to reduce costs and focus time, capital and resources on driving growth in their business."

Cincinnati Bell has obtained commitments for a $970 million senior secured credit facility to fund the acquisition, refinance Cincinnati Bell's existing revolver and term loans, pay fees and expenses incurred in connection with the transaction, and finance ongoing working capital and other general corporate needs.

Cincinnati Bell and ABRY Partners are targeting completion of the transaction by the end of the second quarter of 2010.

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