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CyrusOne aiming to become Europe's 'true wholesale first provider'

CyrusOne Inc.'s European footprint will expand in the coming years as the company seeks to consolidate its position in a fractured market bereft of a "true wholesale first provider," company executives said Dec. 21.

The data center real estate investment trust said earlier in the day that it had agreed to buy, as part of a broader European expansion strategy, the hyperscale data center provider Zenium Data Centers, which has two properties in London and two in Frankfurt, Germany.

On a post-deal announcement conference call, CyrusOne President and CEO Gary Wojtaszek said the two companies share an "absolute" focus on delivering megawatts of capacity at low costs. CyrusOne aims to export its own supply chain management expertise and grow the average size of the European facilities.

Jonathan Schildkraut, executive vice president and chief strategy officer, would not offer a specific aim with respect to CyrusOne's 2018 year-end European property count. As of Dec. 21, the company has an additional site in Frankfurt under contract and is in advanced negotiations on "a number" of other sites in England, Germany, Ireland and potentially other countries.

"We're really approaching the rest of Europe [on a] dual track that's both organic and inorganic opportunities," Schildkraut said. "We're still looking at a range of potential outcomes."

Schildkraut also identified cost synergies as a main theme of its European expansion program, though he acknowledged that little will be achieved in that respect with the Zenium deal alone.

"To the extent that we're looking to additional markets, I'd argue that we'd ... be excited to take on talented management teams into the organization," he said, and collapse back-office, sales and marketing divisions. "I do want to highlight that this is not the destination, but just a next critical step on a longer-term journey."

The transaction is expected to close in the 2018 first quarter.