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CenturyLink Partner Ecosystem ‘Absolutely Essential’ Post $2.15 Billion Data Center Sale

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Edward Gately**Editor’s Note: Please click here for a recap of the biggest channel-impacting mergers in July-August 2016.**

Ending months of speculation, CenturyLink is selling its data centers and colocation business to BC Partners, in a consortium that includes Medina Capital Advisors and Longview Asset Management, for $2.15 billion in cash.

CenturyLink will get a minority stake valued at $150 million in the consortium’s new global secure infrastructure company. The BC Partners/Medina Capital-led consortium will assume ownership of CenturyLink’s portfolio of 57 data centers at closing. The data-center portfolio includes about 195 megawatts of power across 2.6 million square feet of raised floor capacity.

CenturyLink's David MeredithDavid Meredith, CenturyLink’s senior vice president of global data-center hosting, tells Channel Partners his company wants to focus its capital investments on items related to the network and managed hosting, and to do that, it doesn’t “necessarily need to own the data centers.” BC Partners is well capitalized, and Medina Capital has a lot of experience in the data-center business and also brings additional capabilities to the new company, “which will help us provide an even broader range of capabilities for our customers,” he said.

“The nature of this will be very much like a partnership,” he said. “CenturyLink will continue to sell into the data centers their full suite of hybrid IT solutions, from network to colocation, to managed hosting to private cloud. CenturyLink will also be the largest customer of the new company, so there [are] a lot of really close connections and relationships that will remain between CenturyLink and the data centers going forward.”

The new entity will be able to invest in expanding the data centers and adding capacity, and CenturyLink will be able to continue to invest in bringing hybrid IT offerings to the customers in those data centers, Meredith said.{ad}

“The CenturyLink partner ecosystem is absolutely essential to the plans going forward,” he said. “We’re looking to grow the business and we’re looking to work very closely with the partners in the ecosystem to help drive that growth and drive that business. We want to be able to reach out to as many customers as possible to come into these data centers and that’s where the partner ecosystem comes into play.”

CenturyLink said it plans to use the net proceeds from the sale to partly fund its $34 billion acquisition of Level 3 Communications announced on Monday. That deal is set to close next fall.

The data center deal is anticipated to close in the first quarter of 2017.

“After conducting a thorough review process, we are pleased to have reached an agreement with BC Partners,” said Glen Post, CenturyLink’s president and CEO. “We believe this transaction will benefit customers, employees and investors. Both CenturyLink and BC Partners have a strong customer focus and are committed to ensuring a seamless transition of the customers and their colocation environments.”

The consortium also is acquiring …

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… four security and analytics companies that previously were part of the Medina Capital portfolio — Cryptzone, Easy Solutions, Brainspace and Catbird.

“We’re combining a worldwide footprint of best-in-class data centers with cutting-edge security and analytics services, integrating these capabilities into a global, highly secure platform that meets today’s critical enterprise, public sector and service provider demands for cybersecurity, colocation and connectivity,” said Manuel Medina, Medina Capital’s founder and managing partner. “Our customers will be able to leverage a suite of on-net security and advanced analytics services deeply integrated into the data center.”

Cryptzone's Tina GravelMedina will lead the new company as CEO.

Tina Gravel, Cryptzone’s senior vice president of strategic channels, said “we are thrilled to be part of the new company.”

“It will allow us to expand into new channels of business and provide us access to additional capital,” she told Channel Partners. “It’s all good for us and our partners.”

Also this week, WeissLaw announced it is investigating possible breaches of fiduciary duty and other violations of law by Level 3’s board of directors in connection to the proposed CenturyLink acquisition. The firm is investigating the board’s decision to sell and whether Level 3’s shareholders will obtain their “fair and proportionate share of the company’s continued success and future growth prospects.”


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