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The deal, expected to be completed in January 2018, will see Iron Mountain acquire all the buildings and land at IO’s Phoenix, Scottsdale, New Jersey and Ohio campuses.
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The facilities total 728,000ft2 and the agreement includes more than 550 IO customers. The datacentres’ modular design is claimed to ensure better security for customers’ servers.
The deal could be worth an extra $60m for IO, depending on the future success of the datacentres.
Iron Mountain has become an active acquirer of colocation assets as it looks to diversify its service revenue in the face of softening demand. In the company’s third quarter 2017 financial results, it attributed a decline in revenue growth to fewer customers retrieving data from storage.
“Our service revenue growth has been negatively impacted by declining activity rates as stored records are becoming less active,” the company said.
“While customers continue to store their records and tapes with us, they are less likely than they have been in the past to retrieve records for research and other purposes, thereby reducing service activity levels.”
Iron Mountain president and CEO William Meaney said that in response to growing customer demand, the company is developing the datacentre side of the business through footprint expansion and “targeted acquisitions of properties with customer profiles that closely mirror our own”.
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Once the IO deal is concluded, Iron Mountain’s portfolio of datacentres will have a combined capacity of more than 90MW, with the potential to add a further 135MW when various construction and expansion projects are completed. The latest acquisition will bring its datacentre business up to 7% of total revenue.
Mark Kidd, senior vice-president and general manager of datacentres at Iron Mountain, said the IO deal would give better market exposure for the Phoenix facility in particular.
“Colocation and cloud providers have made significant investments in Phoenix in the past few years, as it boasts diverse energy sources and relatively inexpensive green power, as well as an attractive business environment,” he said. “This transaction also enhances our ability to support the needs of the largest cloud providers through new development with expansion capacity in Phoenix as well as New Jersey.”
Kidd described the IO customers as a “diversified roster”, including aerospace, financial services and federal government organisations.
“Its strong enterprise and cloud customer base is complementary to that of our existing datacentre business, and more than 40% of IO’s customers are also customers in our core records and data management businesses,” he said.
George D Slessman, founder and CEO of IO, said the partnership with Iron Mountain “will provide attractive opportunities for our employees and a broader, more geographically diverse platform of facilities and services for our customers”.
Iron Mountain follows colocation provider Equinix in recent acquisition of IO assets. In February 2017, Equinix bought an IO datacentre in Slough to meet growing demand for capacity in the UK. The fee was undisclosed.