Carpathia Hosting Inc

Carpathia Hosting Inc – OVERLAND PARK, Kan., May 6, 2015 // — QTS Realty Trust (NYSE: QTS) has acquired Carpathia Hosting, a Virginia-based colocation, cloud and managed services provider. announced today that it has reached an agreement to acquire approx. $326 million Carpathia is a leading hybrid cloud services and infrastructure-as-a-service (IaaS) provider providing advanced security and compliance solutions to advanced enterprise customers and federal agencies.

The deal strengthens QTS’ existing, fully integrated real estate and technology services platform, known as QTS 3C: Custom Data Center (C1), Collocation (C2) and Cloud and Managed Services (C3). . The associated companies will serve more than 1,000 customers in North America, Europe and Asia Pacific.

Carpathia Hosting Inc

Carpathia Hosting Inc

“Carpathia will be a great complement to our existing platform that enhances and expands our premium product and service offering while providing added value to customers, partners and employees,” said Chad Williams, CEO of QTS Director. “The addition of Carpathia to this experienced management team will accelerate QTS’ already industry-leading performance and further strengthen QTS’ unique integrated technology services platform that the company’s customers increasingly demand.”

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“We appreciate the leadership position that QTS has taken in understanding the evolving needs of the industry and developing dynamic solutions to meet customer needs,” said Peter Weber, CEO of Carpathia. “Joining QTS will leverage combined strengths and continue to develop innovative hybrid cloud solutions for enterprise and public sector customers. Additionally, Carpathia’s existing customer base will continue to rely on QTS for their unified data center needs.” Take advantage of world-class mega data center infrastructure.”

Peter Weber will join the QTS management team as Chief Product Officer. The rest of Carpathia’s management team will play a key role in further developing and delivering products and services that customers seek and value.

The financial impact on QTS, which is expected to be immediately consistent with this transaction, was $0.01 per share for OFFO and $0.10 for AFFO in 2015, and $0.10 for OFFO and $0.10 per share for AFFO. Estimated $0.25. 2016. The terms of the agreement require QTS to purchase Carpathia for approximately $290 million and assume approximately $36 million in capital lease obligations for a total enterprise value of approximately $326 million. Carpathia is expected to contribute approximately $90 million in annual revenue and approximately $32 million in annual adjusted EBITDA in the second half of 2015. Additionally, QTS anticipates an additional $2m in synergies for early 2016, resulting in an estimated purchase price of approximately 9.6x 2015 annual adjusted EBITDA, pro forma for synergies. In addition, QTS expects to incur approximately $7m in fees and transaction-related costs and approximately $15m in one-time integration costs during 2016.

QTS expects to finance the transaction through available capacity under the company’s credit facilities, and ultimately finance the acquisition in a neutral manner through a combination of equity and debt securities.

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Management will host a call on Wednesday, May 6, 2015 at 4:00 p.m. Central / 5:00 pm Eastern with additional details surrounding the transaction. The dial-in number for the conference call is (877) 883-0383 (US) or (412) 902-6506 (International). The participant’s login number is 3726112 and callers are requested to dial ten minutes prior to the start time. A link to the live telecast and replay is available on the Company’s website (www.qtsdatacenters.com) under the Investors tab.

Financial and Legal Advisors Deutsche Bank Securities Inc. Acted as Lead Financial Advisor and TD Securities acted as Financial Advisor to QTS. Hogan Lovells acted as legal counsel to QTS. Credit Suisse acted as exclusive financial advisor to Spear Capital Partners, Carpathia’s controlling shareholder, and Denton acted as legal counsel to Carpathia and Spear Capital Partners.

About QTS QTS Realty Trust, Inc. (NYSE: QTS) is a leading national provider of data center solutions and fully managed services and security and compliance. The company offers a complete, unique portfolio of core data center products, including custom data center (C1), colocation (C2) and cloud and managed services (C3), which provide the flexibility, scale needed to support the rapidly growing hybrid and provides security. Infrastructure requirements for web and IT applications. With 12 data centers in eight states, QTS owns, operates and manages approximately 4.7 million square feet of secure, state-of-the-art data center infrastructure and supports more than 850 customers. Efficiency and high performance for third-party data center owners and operators. For more information about QTS, visit www.qtsdatacenters.com, call toll free at 877.QTS.DATA or Twitter @DataCenters_QTS.QTS Realty Trust. Building large data centers like this massive facility in Suwanee, Georgia. (Photo: QTS Realty)

Carpathia Hosting Inc

In addition to boosting its government business, the deal added core managed hosting capabilities and made QTS a global player.

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Scale and breadth of services offered appear to be two key attributes a data center provider needs to succeed in today’s market, and QTS Realty Trust had both when it acquired rival Carpathia Hosting in a $326 million deal. In the month of May.

In addition to approximately 230 additional customers, the acquisition adds significant managed hosting capacity to the QTS product portfolio and doubles the size of data centers in the fleet, including, for the first time, offshore facilities. QTS’ current international markets are Toronto, London, Amsterdam, Hong Kong and Sydney.

Consolidation in the data center provider space has been an ongoing theme over the past few years, and deals typically revolve around increasing a company’s ability to have a single location for a full range of global data center infrastructure and services. . Digital Realty bought Deluxe to expand its retail and communications services, Equinix sold Telecity Group, making it the largest in Europe, and NTT to Ragingwire to grow its US influence and e-Shelter in Germany. Many participated. A few recent examples of high quality are expanding into the European market.

One thing that stands out about the QTS-Carpathia deal is Carpathia’s significant central government business. QTS has put a lot of effort into growing its game as a government data center service provider in recent years, which has been boosted in a big way by acquisitions.

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Before the acquisition, the share of government contracts as a percentage of QTS’s total revenue was in the single digits, the company’s COO, Dan Pennewitz, said in an interview. That share is now about 15 percent, he said, including government buyers at the federal, state and local levels.

The agreement provides additional mandates to serve government customers, including FedRAMP, which is required for federal agencies to provide cloud services, and HIPPAA compliance, a set of security and privacy regulations for individually identifiable health information. .

High demand in the public sector is for hybrid services, said John Lind, QTS VP of federal markets. These contracts are typically done through systems integrators, and QTS sees many requests from integrators that include some hardware in on-premise facilities, some managed hardware in a collection data center, and some cloud services.

Carpathia Hosting Inc

The federal government’s “cloud first” push is driving much of this, as well as a desire to move IT from a capital expense to an operational one, according to Land.

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But state business isn’t the only reason QTS bought Carpathia. Another reason is its managed and cloud services portfolio, which has pushed QTS cloud and managed services volume from 10 percent of total revenue to more than 25 percent, Pennewitz said.

The acquisition adds 13 data centers to the 12 QTS already has. However, unlike QTS, Carpathia rents its data centers. The fate of this lease will be determined on a case-by-case basis. Where this makes sense, the sites will be consolidated into the larger QTS facility after the end of the lease. QTS will renew leases where it strategically fits best, Pennewitz said. Digital Realty Trust has signed a partnership agreement with its long-standing client Karpathia Hosting, a provider of managed hosting and cloud infrastructure services. The two will jointly market infrastructure solutions that complement Carpathia’s range of services in digital reality data centers.

San Francisco-based Digital Realty is actively trying to move away from its traditional business model that relies on leasing bulk data center space. The company announced earlier this year that it would use partners to provide complete solutions to customers, and the Karpathia deal is the latest example of that effort.

Carpathia serves clients in the government, digital media and healthcare solutions markets. Headquartered in Dulles, Virginia (just outside of Washington, DC), it is very active in pursuing cloud services business with the US federal government and has partnered with VMware to jointly offer VMware vCloud services to the federal government. Submit to the agencies.

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Michael Bolick, director of global alliances at Digital Realty, said the two companies will market the solutions and the sales teams will refer to each other when the opportunity arises.

“We do not resell Carpathia’s services,” he said.

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