Iron Mountain Incorporated® has announced it has entered into a definitive agreement to acquire the U.S. operations of IO Data Centers LLC, a leading colocation data center services provider based in Phoenix, Arizona, for $1.315 billion plus up to $60 million based on future performance and subject to customary adjustments. With the transaction, Iron Mountain will acquire the land and buildings associated with four state-of-the-art data centers in Phoenix and Scottsdale, Arizona; Edison, New Jersey; and Columbus, Ohio. The existing data center space in the four owned facilities totals 728,000 sq ft, providing 62 megawatts (MW) of capacity with expansion potential of an additional 77 MW in Arizona and New Jersey.  

This agreement follows the acquisition of FORTRUST data center on September 1, 2017 and the announcement of Iron Mountain’s international data center expansion through the planned acquisition of two Credit Suisse data centers in the London and Singapore markets. Upon closing of the Credit Suisse and IO transactions in early 2018, Iron Mountain’s data center portfolio will total more than 90 MW of existing capacity, with an additional 26 MW of capacity currently under construction and planned and future expansion potential of another 135 MW.

“We continue to experience strong demand and growth in our data center business, with a focus on establishing a presence in the largest global markets for colocation and enterprise customers.  Our strategy includes organic expansion within our existing footprint, greenfield development in the largest U.S. markets such as our newly opened campus in Northern Virginia, and targeted acquisitions of properties with customer profiles that closely mirror our own,” said William L. Meaney, president and CEO, Iron Mountain. 

“This transformative transaction is closely aligned with our strategy and we expect it to accelerate our growth profile by bringing our data center business to approximately 7% of total revenue and approximately 10% of Adjusted EBITDA by 2020 — significantly exceeding our initial goal — while enhancing business diversity and the margin profile of the company,” Meaney added. “We believe we can add significant value to IO’s U.S. operations by leveraging our strong brand that is synonymous with security and trust, and our relationships with more than 30,000 North American data management customers. 

“The addition of IO’s data centers enhances our geographic diversification and provides market-leading exposure to Phoenix, the fourth fastest market for absorption in the U.S. in 2017, and the 12^th largest data center market globally. Colocation and cloud providers have made significant investments in Phoenix in the past few years, as it boasts diverse energy sources and relatively inexpensive green power, as well as an attractive business environment,” said Mark Kidd, senior vice president and general manager, Iron Mountain Data Centers. “Importantly, this transaction also enhances our ability to support the needs of the largest cloud providers through new development with expansion capacity in Phoenix as well as New Jersey, another attractive market due to its proximity to the New York metro area.” 

“Additionally, IO brings a diversified roster of more than 550 customers that includes blue chip financial services, aerospace, federal government and technology companies among its Top 10, with no single customer representing more than 10% of total revenue. Its strong enterprise and cloud customer base is complementary to that of our existing data center business, and more than 40% of IO’s customers are also customers in our core records and data management businesses,” Kidd said. 

“I am incredibly proud of the team at IO and the extraordinary company they have built since our founding in 2007,” said George D. Slessman, founder and CEO, IO. “We are pleased to enter into an agreement with Iron Mountain and excited by the potential this transaction represents. Iron Mountain’s deep customer relationships, global scale and excellent access to capital markets, combined with IO’s strong presence in the high-growth data center industry will provide attractive opportunities for our employees and a broader, more geographically diverse platform of facilities and services for our customers. We know Iron Mountain shares our commitment to the highest levels of customer service, security and operational quality, and we are confident our customers will be in good hands.” 

Transaction Highlights
All four facilities provide access to large power networks with the ability to serve numerous enterprises in the respective data center markets and are designed to meet the security requirements of highly regulated vertical market segments. 

IO Phoenix Campus
Leading interconnected campus with significant expansion potential 
• Current data center capacity: 38 MW (approximately 95% utilization)
• Weighted average remaining lease term of 2.9 years 
• Expansion capability: 2 to 3 MW through an expansion of the existing shell, plus an additional 60 MW on adjacent 9-acre owned and entitled parcel 

IO Scottsdale
Raised floor with dedicated metro optical network to IO Phoenix campus 
• Current data center capacity: 7 MW (approximately 88% utilization)
• Weighted average remaining lease term of 2.2 years 

IO New Jersey Campus
830,000 sq ft building, including approximately 400,000 sq ft of warehouse space for subleasing; former New York Times printing building, partially fitted with data centers, offers proximity to Wall Street and health care firms 
• Current data center capacity: 15 MW (approximately 79% utilization)
• Weighted average remaining lease term of 4.3 years 
• Expansion capability: 15 MW

IO Ohio
Highly efficient data center 
• Current data center capacity: 2 MW (approximately 98% utilization)
• Weighted average remaining lease term of 4.0 years