Iron Mountain to buy IO Data's U.S. operations for $1.32 billion

(Reuters) - Document storage company Iron Mountain Inc IRM.N said on Monday it would buy the U.S. operations of IO Data Centers LLC for about $1.32 billion, giving it access to the lucrative colocation data center services business.

Under the deal, Iron Mountain will acquire the land and buildings associated with four data centers in Phoenix and Scottsdale, Arizona; Edison, New Jersey; and Columbus, Ohio.

A colocation is a data center facility in which a business can rent space for servers and other computing hardware.

The existing data center space in the four facilities totals 728,000 square feet, providing 62 megawatts (MW) of capacity with expansion potential of an additional 77 MW in Arizona and New Jersey, Iron Mountain said.

The company - which manages digital and physical records, including storing and shredding of physical documents - will also pay up to $60 million based on future performance to IO Data, subject to customary adjustments.

“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 12th largest data center market globally,” Chief Executive William Meaney said.

Iron Mountain said it expected the deal, expected to close in January, to add to adjusted funds from operations (AFFO) in 2019.

Ardea Partners LLC, Evercore, Centerview Partners LLC, Barclays and JP Morgan are financial advisers to Iron Mountain.

Morgan, Lewis & Bockius LLP, Sullivan & Worcester, Weil, Gotshal & Manges LLP are serving as legal counsel to Iron Mountain.

Goldman, Sachs & Co are financial advisers of IO Data, while Simpson Thacher & Bartlett LLP are serving as its legal counsel.

Reporting by Sonam Rai in Bengaluru; Editing by Anil D’Silva