Tuesday, April 10, 2012 at 1:15PM Xand and Access Northeast Merge, Eye Growth in the Cloud
Company Projects 70 Percent Growth in Cloud Services in 2012
Over the past year, Boston-based private equity of firm ABRY Partners has accumulated a sizable data center portfolio across the U.S. through a string of deals. Last week, ABRY increased its stake data centers with yet another transaction. On Tuesday April 3, ABRY announced that one of its portfolio companies, data center operator Xand Corporation, had merged with Marlboro, MA-based Access Northeast. Financial terms of the deal were not disclosed.
The merger of Xand and Access Northeast creates one of the largest privately-owned data center companies in the Northeast U.S. with facilities in Massachusetts, New York and Connecticut. The combined company now serves approximately 1,000 customers with a mix of facilities-based colocation services and managed cloud services.
While Access Northeast will be a newcomer to the ARBY umbrella of companies, Xand itself has only been an ARBY company since late 2011. The Hawthorne, NY-based data center provider was acquired by ABRY in a deal announced October 13, 2011. Xand operates approximately 30k square feet of data center space located in its flagship data center in Westchester County, NY.
Access Northeast meanwhile operates data centers in three New England cities—Worcester and Marlboro, MA, and Danbury, CT. In June 2011, Access completed a new 10k square foot raised floor project in Marlboro, increasing its data center space to 25k in the region. The rest of Access’ 50k square feet of data center space is split between Worcester and Danbury.
There is no publicly-available financial information on both Xand and Access Northeast, but Rob Stephenson, chief marketing officer of the merged company (and former ceo of Access Northeast), recently estimated Xand’s annual revenue at $13m-$15m and Access Northeast’s in the range of $19m-$20m. While both companies have exhibited strong growth in recent years according to Stephenson, he sees the top line for both entities pushing higher in the coming years as well, fueled by the demand for cloud services.
"We've seen a combined growth of 20 percent over the last three to four years," commented Stephenson. "What's getting our growth this year to up to 25 percent is the growth in cloud services. We anticipate at least a 70 percent growth in cloud services, maybe even a doubling in revenue, from 2011 to 2012."
ABRY will likely invest heavily in Xand/Access Northeast in the next few years, supporting this increasing demand for cloud services. The combined companies control approximately 60k square feet of developable data center space on top of their facilities currently in operation.
ABRY has a wealth of experience in the data center and managed services space, and has been successful in managing companies through high-growth periods and then dealing them for a premium. ABRY picked up Hosted Solutions in 2008 for $140m, and then sold the managed services provider to Windstream just two years later for $310m. Similarly, ABRY sold CyrusOne to Cincinnati Bell in 2010 for $525m just two years after acquiring the data center company. ABRY invested heavily in CyrusOne during 2008 and 2009 and was rewarded with attractive deal multiples of 7.2x revenue and 12.5x OIBDA.
