Zayo Group Holdings to Sell Data Center Subsidiary

Image by Brett Sayles via Pexels.com

DataBank is set to grow its colocation presence to more than 64 data centers with the acquisition of zColo from its parent company Zayo Group Holdings.

READ ALSO: Data Center Real Estate Propelled by Remote Work: CBRE

The transaction is expected to close by the end of 2020 and will see Zayo sell 44 of its data centers located throughout more than 20 markets in the U.S. and Europe. Zayo is being advised by J.P. Morgan and Skadden Arps, while DataBank is being advised by DH Capital and Jones Day.

zColo, the colocation services subsidiary of Zayo, served more than 1,700 customers mostly in the media and entertainment industries, as well as carriers and cable companies. With locations in France, London, New York, Texas, Illinois, California and more, zColo’s acquisition translates to adding more than 20 markets to DataBank’s reach. The portfolio includes more than 1.1 million square feet of data center space and 141 MW of installed UPS capacity. DataBank’s previous portfolio of 20 data centers included three properties in the Kansas City area, including a facility in Lenexa, Kan., that the company acquired in November 2018.

Dan Caruso, CEO of Zayo, said in prepared remarks that the sale gives its colocation customers the benefit of a larger operator, while allowing Zayo to focus on providing fiber and connectivity solutions.

Mutual agreement

Caruso also said in prepared remarks that this transaction offers mutual benefits for Zayo and DataBank. Zayo will now focus on building its fiber digital infrastructure, while DataBank will focus on hosting services.

As DataBank will own and manage the sites, Zayo will continue to be the anchor tenant in the zColo facilities through a long-term agreement, according to DataBank. The companies are also expected to collaborate as Zayo can provide fiber networking to DataBank’s clients and DataBank can reciprocate by offering colocation services to Zayo’s customers.