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Shaw Communications Expands in U.S. With $1.2B ViaWest Deal

Stocks in this article: SJR

NEW YORK (The Dea) -- Canadian media group Shaw Communications (SJR)SJR is expanding into the U.S. data center market with the $1.2 billion purchase of private equity-backed ViaWest Inc.

Chief executive Brad Shaw told investors during a Thursday conference call that following the purchase, Shaw would be "immediately positioned at the forefront" of the market for outsourced cloud computing and outsourced server management among mid-market companies.

The deal provides a benchmark for privately held data centers, following the sale of Peak 10 Inc. to GI Partners LP earlier this year.

Shaw is paying Oak Hill Capital Partners 13 times annualized Ebitda for ViaWest, which operates 27 data centers in Denver, Dallas, Austin, Salt Lake City, Las Vegas, Portland, Minneapolis and Phoenix. The price includes $830 million in cash and $370 million in assumed debt.

ViaWest co-founder and CEO Nancy Phillips said that the data center market is "very fragmented." The company might look to expand in the Eastern US within the next 18 months.

"That's an area we are taking a look at very aggressively," Phillips said.

The acquisition follows Shaw's $220 million purchase of business telecom Enmax Envision Inc. last year. Combined, Shaw said its business telecom unit and ViaWest will produce $550 million in revenues and $280 million in Ebitda.

Oak Hill bought the Denver data center operator in 2010 from Trinity Equity Investors, Goldman, Sachs & Co. and Quilvest SA. The Oak Hill executive who led the purchase, Robert Morse, left the firm recently to form Strattam Capital LLC.

The sale of Charlotte, N.C., data center operator Peak 10 to GI Partners earlier this year drew attention to ViaWest and to Latisys Corp., which has backing from Great Hill Partners LLC and Catalyst Investors LP.

Peak 10 operates data centers in markets such as Atlanta, Cincinnati, Nashville and Tampa, and would be an East Coast-complement to ViaWest's holdings. Latisys, which tested the market last year, has a broader portfolio, with data centers in markets from Irvine, Calif., to Englewood, Colo., and Ashburn, Va.

TD Securities Inc. is Shaw's financial adviser on the ViaWest purchase. The buyer retained Davies Ward Phillips & Vineberg LLP and Simpson Thacher & Bartlett LLP lawyers including Atif Azher, Tristan Brown and Katharine Moir.

RBC Capital Markets LLC advised ViaWest, which received counsel from Paul, Weiss, Rifkind, Wharton & Garrison LLP.

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