On Monday, October 19th, Windstream (NASDAQ: WIN) announced that it had reached an agreement to sell its data center business to TierPoint for $575.0 million in an all-cash transaction. Windstream was among the first of the telcos to move into the data center space, acquiring Hosted Solutions for $320m in 2010.
- TierPoint is a national, leading provider of cloud, colocation and managed services
- Combined operations will serve 4,500+ customers with approximately 500,000 sq. ft. of data center capacity in 19 U.S. markets.
- Transaction has already been approved by both boards and is expected to close within the next 2-4 months.
Transaction will result in Windstream establishing a continuous, reciprocal, strategic relationship with TierPoint as both companies will sell their products and services to one another’s prospective customers as referral partners.
- Along with the spinoff of its network assets into a REIT earlier in 2015, the data center sale is consistent with Windstream’s continuing effort to delever its balance sheet.
- Jerry Kent, Chairman and CEO of TierPoint, commented on the transaction and referral partner agreements saying “This is a great strategic fit for TierPoint and our customers.”
- Transaction has an EV/REV multiple of 4.3x and an EV/OIBDA multiple of 12.9x.
- Transaction will allow TierPoint to continue to grow its data center business, which already consists of 13 data centers across 8 states.
- Windstream will continue to generate revenue from data center sales through the referral partner agreement with TierPoint, maintaining a level of exposure to the high growth segment without owning and operating the physical data centers.