An investor group, comprising Ontario Teachers’ Pension Plan, Providence Equity Partners and Madison Dearborn Partners, and BCE Inc. today announced an agreement to acquire 100% of Canadian data centre operator Q9 Networks for C$1.1 billion. “Q9 looks forward to working with these leading private-equity firms and Canada’s largest communications company, all of which have a strong track record of growing leading-edge companies like Q9,” said Osama Arafat, CEO of Q9 Networks. “They recognize the value of Q9 and its team, an exceptional Canadian company dedicated to providing organizations with highly secure and reliable data centre infrastructure services.”
Under the agreement, Teachers, Providence and Madison Dearborn will contribute 70%, or C$420 million of the equity funding and Bell will provide the remaining 30%, or C$180 million. New debt financing by Q9, already committed, will also fund a portion of the acquisition. The transaction is expected to close before the end of 2012.
With 11 data centers in Alberta, British Columbia and Ontario, Q9 is Canada’s leading provider of outsourced data center solutions for organizations with mission-critical IT operations. Q9 will continue to be headquartered in Toronto and operate as a stand-alone entity. Existing Q9 management will continue operating the company, including Chief Executive Officer Osama Arafat and President & Chief Operating Officer Paul Sharpe (www.q9.com).
“Q9 is a recognized leader in data centre services for business customers large and small, an ideal partner to grow our hosting and cloud-based business while leveraging our world-leading broadband network infrastructure,” said Tom Little, President of Bell Business Markets. “Bell looks forward to working with our partners and to offering our national business customer base access to Q9’s hosting and co-location services while delivering Bell’s broadband network solutions to Q9’s extensive client roster.”
Bank of Montreal, Royal Bank of Canada and Toronto Dominion are providing debt financing for the transaction. BMO Capital Markets and TD Securities served as financial advisors to Q9. Barclays, Evercore Partners, and RBC Capital Markets are serving as financial advisors to the investor group.
With $117 billion in assets as of December 31, 2011, the Ontario Teachers’ Pension Plan is the largest single-profession pension plan in Canada. An independent organization, it invests the pension fund’s assets and administers the pensions of 300,000 active and retired teachers in Ontario and is based in Toronto (www.otpp.com).
Providence Equity Partners invests in the media, entertainment, communications and information industries and has approximately $23 billion of equity capital under management. The firm was founded in 1989 and is based in Providence, RI with additional offices in New York, NY; Los Angeles, CA; London, UK; Hong Kong; and New Delhi (www.provequity.com).
Madison Dearborn Partners has more than $18 billion of capital under management and makes investments through its most recent funds, Madison Dearborn Capital Partners V and Madison Dearborn Capital Partners VI. Madison Dearborn invests in businesses across a spectrum of industries including basic industries; business and government services; consumer; financial services; health care; and telecom, media and technology services. The firm was founded in 1992 and is based in Chicago, IL (www.mdcp.com).
BCE is Canada’s largest communications company providing broadband wireless and wireline communication services to residential and business customers across Canada. The company operates Bell Media, a multimedia company with assets in television, radio and digital media, including CTV, Canada’s #1 television network, and the country’s most-watched specialty channels. The company is based in Montreal (www.bce.ca) (www.bellmedia.ca).
