Bell Canada, investors wrap up Q9 Networks purchase

BCE (NYSE: BCE), Bell Canada's parent company, and a group of investors on Thursday completed their acquisition of Q9 Networks, a data center operator.

With the acquisition of Toronto-based Q9 complete, Bell Canada can now grow out its cloud services drive with an additional set of hosting, co-location and cloud computing services.

Similar to CenturyLink's (NYSE: CTL) acquisition of Savvis in 2011, Q9--which has 12 data centers in British Columbia, Alberta and Ontario--will continue to operate as a standalone company and be run by its current management team, including CEO Osama Arafat and President and COO Paul Sharpe.

The CAD1.1 billion (USD1.11 billion) Q9 acquisition was funded with CAD430 million (USD436 million) from the Ontario Teachers' Pension Plan (Teachers'), Providence Equity Partners and Madison Dearborn Partners, while Bell provided CAD185 million (USD187 million) of the equity funding. Meanwhile, Q9's own debt financing funded a portion of the acquisition price.

Bell Canada's business unit, Bell Business Markets, said it has established a commercial arrangement with Q9 to extend its services to its existing and new business service targets throughout Canada.  

This deal has some obvious benefits to both Bell Canada and Q9.

The key benefit to Bell Canada, which prior to the acquisition of Q9 operated six data centers, is it can now instantly expand its data hosting and cloud service reach to an even broader set of customers. In buying Q9, Bell immediately adds 11 data centers located in Western Canada to its portfolio to more effectively compete against Telus (Toronto: T.TO).

Likewise, as a wholly-owned subsidiary of BCE, Q9 can now not only leverage Bell's wide-reaching fiber backbone networks to interconnect its data centers, but also extend other services such as Ethernet, IP/VPN and conferencing to its existing customer base, which may want to consolidate its disparate service sets with one service provider.

For more:
- see the release

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