Q9 Moves Forward Amid AcquisitionBy Justin Lee, theWHIR.com
September 2, 2008 — (WEB HOST INDUSTRY REVIEW) — Following early rumors of a possible acquisition, data center infrastructure provider Q9 Networks (q9.com) confirmed last week that it has accepted an offer to be acquired for $361 million by CDC Acquisition, an affiliate of ABRY Partners (abry.com).
Q9 offers a range of data center infrastructure services, bandwidth services, and managed services, including bandwidth, dedicated servers, firewalls, load balancing, virtual private networking and back-up/restore.
The Toronto-based company has experienced a significant growth spurt in the past couple years, driven by a healthy Canadian economy and a demand for IT and computing services. Traded publicly, the company is on board with the acquisition from a management standpoint, though the deal still needs to be approved by shareholders. The acceptance of the deal also includes a provision that invites competing acquisition offers until October 3.
Hoping to take advantage of this upward growth, ABRY Partners approached Q9 regarding the acquisition, says company CEO Osama Arafat.
The media and communications focused private equity firm has acquired several high-profile companies in the energy, financial services, and healthcare marketplaces, including last year’s purchase of colocation and managed data center services provider CyrusOne.
Despite the acquisition, Arafat insists that there will be no major changes to the company, or its growth strategy, saying the entire management team “is not going anywhere” and is “committed to keeping the growth plan for Q9.”
“We are simply transitioning from being a publicly-held company to being a owned by a single owner and being a private company,” says Arafat. “That should not have any bearing on future growth plans, how we operate, or any of the employees.
“ABRY is a very large private equity fund that certainly has the financial wealth to support all of our growth plans. We’ve discussed the growth plans with them and we’re satisfied that they see eye to eye with the Q9 management.”
The company’s growth strategy includes its recently revealed plans to build a third data center in Calgary, Alberta, which brings Q9′s total data center investment in the Calgary market to $85 million.
In addition to the Calgary facilities, the company operates a handful of data centers in Toronto, and Brampton, Ontario.
Q9 says it will invest $20 million in a building and property in the Calgary area to house the new facility, and intends to invest up to $30 million more to build out an initial capacity equivalent to 1,200 cabinets. The first phase of capacity in the new facility is expected to open in the summer of 2009.
Fueled by a thriving oil and gas industry, the Calgary market has gained a reputation as Canada’s fastest growing city during the past few years.
“We’ve been capitalizing on this opportunity by making sure that we keep up with the demands and continue to invest in that market as long as there is demand from our customers and new customers in that market,” says Arafat.
The newest Calgary facility will be built to the same standard as all Q9 data centers, with features such as raised floors, biometric security systems, climate control, HVAC and fire suppression systems, multiple connections to the Internet, uninterrupted power and around the clock monitoring and support.
The company’s data center design also allows for the further addition of space and electrical power as needed, scaled according to the customer’s own business growth.
And while Arafat says that Q9 will continue to “follow the demand” by opening data centers in budding markets like Calgary, it has no plans as of yet to expand beyond the borders of Canada.
“There continues to be a lot of demand in Canada,” says Arafat. “We’ve been very busy over the last couple of years just keeping up with that demand. As long as we’re busy keeping the demand in Canada, we’re going to stick to serving this market until we have a clear dominance before we try to go somewhere else.”
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