Savvis, Inc. (NASDAQ:SVVS) , a global leader in cloud infrastructure and hosted IT solutions for enterprises, today announced it has entered into a definitive agreement to acquire Fusepoint, Inc., a portfolio company of M/C Venture Partners. Fusepoint is a leading independent provider of managed IT and colocation services to enterprises in Canada.
Under the agreement, Savvis will acquire Fusepoint for $124.5 million in cash, subject to a working capital adjustment. For the first quarter of 2010, Fusepoint's annualized revenue was $47.4 million. Adjusted EBITDA for the first quarter was $3.0 million, or $12.0 million on an annualized basis.
Fusepoint operates three data centers in Toronto, Vancouver, and Montreal, giving the company a national footprint. Fusepoint is well-positioned in the Canadian hosting market, which is still in its early stages of growth. The company has more than 330 marquee customers.
Fusepoint has generated impressive historical growth since 2006, with an overall revenue compound annual growth rate (CAGR) of 18% and adjusted EBITDA growing at a CAGR of 83%. The company has been adjusted EBITDA positive since 2005 and has generated net income and free cash flow since 2008. Fusepoint reported $41.7 million in revenue in 2009.
"The acquisition of Fusepoint is a step toward one of our most important goals to expand our geographic presence around the world," said Jim Ousley, Savvis chairman and chief executive officer. "Our largest customers have been asking us to expand into Canada, and the acquisition of Fusepoint allows us to do so in a seamless and efficient manner. Our best-in-class product set and strong vertical market focus meshes well with Fusepoint's fast growth and deep penetration of Canadian enterprises. Fusepoint has a great track record and extends Savvis' reach into the highly promising Canadian hosting market including Toronto, the financial center of Canada."
"We're pleased to become a part of the Savvis family, as we believe our offerings are very complementary and highly synergistic," said George Kerns, Fusepoint chief executive officer. "By folding our footprint into Savvis' global operations, we'll be able to better serve our customers, by providing them with a broader range of services and access to a global footprint with leading-edge technology."
Fusepoint's three data centers have a total of more than 40,000 sellable sq ft, with Toronto the largest at 28,000 sellable sq ft. Over the past several years the company has made significant investments in its data centers, resulting in a set of high quality facilities.
The acquisition of Fusepoint, which is subject to customary closing conditions, is expected to close early this summer. Savvis plans to finance the acquisition from available cash and an upsize in its existing revolver led by Wells Fargo Capital Finance, LLC, part of Wells Fargo & Company. GCA Savvian Advisors, LLC served as exclusive financial advisor and Arnold & Porter LLP served as legal advisor to Savvis. Signal Hill Capital Group LLC served as exclusive financial advisor, Edwards Angell Palmer & Dodge LLP served as legal advisor and Olsler, Hoskin & Harcourt LLP served as special Canadian counsel to Fusepoint.