Iron Mountain Inc. agreed to acquire the U.S. operations of a Phoenix-based colocation data center services provider and launched a public offering of 14.5 million common shares to partly fund the acquisition.
Under the deal terms, the company will acquire IO Data Centers LLC's U.S. operations for approximately $1.32 billion plus up to $60 million based on future performance.
The deal, set to close in January 2018 and expected to be modestly accretive to Iron Mountain's adjusted funds from operations in 2019, will see the company purchase the land and buildings associated with four state-of-the-art data centers in Phoenix and Scottsdale, Ariz.; Edison, N.J.; and Columbus, Ohio.
The existing data center space in the four owned facilities aggregates 728,000 square feet, providing 62 MW of capacity with expansion potential of a further 77 MW in Arizona and New Jersey.
The company said in a release that following the transaction and expected financing, it remains on track to cut its dividend payout as a percentage of AFFO to between 70% and 75%, assuming annual dividend-per-share growth of roughly 4%.
The underwritten public offering carries a 30-day option for the underwriters to acquire up to 2,175,000 additional common shares.
Based on the company's closing stock price of $40.70 per share on Dec. 11, gross proceeds, including the additional-share option, are expected to come to about $678.7 million.
J.P. Morgan, BofA Merrill Lynch, Wells Fargo Securities, Barclays and Evercore ISI are the joint book-running managers for the offering.
Ardea Partners LLC, Evercore and Centerview Partners LLC are acting as financial advisers to Iron Mountain in the transaction while Goldman Sachs & Co. is serving as financial adviser to IO.
Morgan Lewis & Bockius LLP, Sullivan & Worcester LLP and Weil Gotshal & Manges LLP are serving as legal counsel to Iron Mountain, with Simpson Thacher & Bartlett LLP acting as legal counsel to IO.
Iron Mountain noted that Barclays and JP Morgan also served as financial advisers to the company on deal.
