After six months of due diligence, Cologix pulled the trigger this week by buying Montreal-based COLO-D.
Denver-based Cologix, which is privately held, closed the deal Wednesday and did not disclose the price, although Cologix CEO and Chairman Bill Fathers said the deal was "one of the largest in North America this year."
While Cologix already operates seven facilities throughout the Montreal region, COLO-D gives it entry into serving the hyperscale cloud market. Hyperscale cloud providers have made Montreal their hub of choice in Canada due to the lower cost of hydroelectric power in the area.
Buying COLO-D adds 50 megawatts of hyperscale data center capacity in Montreal in an area where Cologix is already a dominant player in the interconnection sector.
Cologix has been looking for ways to expand beyond its co-location and interconnection services in regional hubs by targeting hyperscale date centers. The decision to buy COLO-D was twofold, according to Fathers, who served a stint as executive vice president and general manager of VMware's cloud services.
"They (COLO-D) are best in breed and it's a market we need to get into," Fathers said in an interview with FierceTelecom. "By bringing our connectivity to their data centers we can add some value. We can bring very diverse dark fiber and a very high bandwidth into the COLO-D facilities to present their hyperscale and enterprise customers with a richness of connectivity options they wouldn't previously have gotten. So we add value, but more importantly we can learn a hell of a lot from them because they've mastered this art of how you rapidly build high-quality, large scale facilities.
"Obviously, Montreal is a phenomenal market, which is primarily where we we'll see our value created and we can export this model rapidly into some of our other markets."
Cologix will take COLO-D's expertise and hyperscale blueprints to Ashburn, Virginia, where it's building a facility to serve the large number of hyperscale cloud providers in the large Northern Virginia market. Fathers said Cologix has just started the design work in Ashburn, but the goal is to have it up and running by 2020.
"So we are going to immediately take their (COLO-D's) design and the people and apply that to the footprint that we are building in Ashburn, which will be about 100 megawatts capacity," Fathers said. "So that's the rationale in a nutshell for this deal. It's a really interesting way for us to diversify our platform and acquire a capability we probably never would have built ourselves and then quickly give us the opportunity to export that into another market."
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Cologix plans to spend more than $500 million on data infrastructure improvements throughout its Montreal footprint. Collectively, the two companies now offer a choice of more than 80 networks and direct on-ramps to the leading hyperscale service providers including Amazon Web Services, Microsoft Azure, Google Cloud Platform and IBM Cloud.
"With this acquisition we are now the number one provider in Canada," Fathers said. "I am not the sort of chest beating type, but it is just a fact. We now have become the largest player with presence in Vancouver, Toronto, Montreal, and we do hyperscale and we do interconnection.
"This company has grown through acquisitions—this is our seventh or eighth acquisition—and so there will be a lot more. My team has done so many of these acquisitions and it is a real skill be able to do them well."
Fathers said that video, in various forms, accounts for 70% of the traffic Cologix handles.
"There are several types of emerging traffic that are going to push that even further, but the video traffic alone, which mostly is syncing into mobile networks, is just unbelievable," he said.
Cologix, which was acquired last year by private equity firm Stonepeak Infrastructure Partners, has data centers in Montreal, New Jersey, Toronto, Minneapolis, Vancouver, Dallas, Jacksonville and Lakeland in Florida and Columbus, Ohio.