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Shaw beefs up enterprise tech offerings with $1.2 bln ViaWest acquisition

Published: 10:53 31 Jul 2014 EDT

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Shaw Communications (TSE:SJR.B)(NYSE:SJR) announced early Thursday it is buying Denver-based ViaWest from Oak Hill Capital Partners and others in a US$1.2 billion deal designed to bolster Shaw's enterprise data push in Canada.

ViaWest is one of the largest privately held providers of data centre infrastructure, cloud technology and managed IT services in North America. It employs more than 350 people and services over 1,300 customers across seven US states. Over the last decade, it has grown from five data centres in two markets to 27 data centres in eight key Western US markets, including Denver, Dallas, Austin, Salt Lake City, Las Vegas, Portland, Minneapolis and Phoenix.

The company has signficant expansion potential, said Shaw, with 70 percent utilization in its existing facilities and expansion capacity at its new Denver, Las Vegas and Minneapolis properties. 

"The ViaWest acquisition provides Shaw a growth platform in the attractive data centre sector and is another significant step in expanding our technology offerings for mid-market enterprises in Western Canada, building on the growth from our 2013 Envision acquisition," said Shaw's chief executive officer, Brad Shaw.

"We identified the data centre sector as an attractive opportunity adjacent to our core business and with the acquisition of ViaWest, Shaw gains significant capabilities, scale and immediate expertise in the growing marketplace for enterprise data services."

 Shaw said it plans to leverage the experience of ViaWest's team to accelerate the development of its Canadian data centre platform so that its Western Canadian customers can benefit.

The deal, which is expected to wrap up in September, is subject to US regulatory approvals, and will be funded with Shaw's cash on hand and its existing credit facility, with no material effect on Shaw's free cash flow, it said. 

Under the terms of the agreement, Oak Hill, along with GI Partners and the company's other current shareholders, will sell their interests in ViaWest to Shaw. ViaWest's current management team, headed by Nancy Phillips, will continue to operate the company from its Denver headquarters as a stand-alone subsidiary of Shaw. 

According to the joint company statement, ViaWest has a 15 percent compounded annual growth rate of revenue and EBITDA between 2010 and 2013, generated by recurring revenue from long-term contracts and strong customer retention.

"With significant growth in IP traffic, bandwidth intensive applications and IT outsourcing, demand for ViaWest's services is growing rapidly," said Shaw. "This acquisition enables Shaw to leverage this best-in-class expertise and positions us at the forefront of this significant market opportunity."

Shares of Shaw fell 2.3 percent to C$26.85 in Toronto on Thursday, paring year-to-date gains to just over 4 percent.

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