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October 28, 2013
MW Transaction Analysis 
NTT Communications to Acquire Two Cloud Computing Firms for $880 Million

NTT Com Acquires Virtela:
  • Total Transaction Size (approx.):                                              $525 million
  • Transaction Structure:                                                                           Cash 

NTT Com Acquires 80% Stake in RagingWire Data Centers

  • Total Transaction Size:                                                               $350 million 
  • Implied Enterprise Value:                                                        $437.5 million
  • Implied EV/LTM Revenue:                                                                        5.1x                          
Transaction Facts
  • NTT Communications Corporation announced today that it will acquire two U.S.-based cloud computing firms in separate transactions totaling approximately $880 million (85.5 billion yen).
  • Virtela, a services provider located in Colorado serving more than 500 customers worldwide, will become a wholly owned subsidiary of NTT Com, expanding its managed network and enterprise cloud services coverage from 160 countries to more than 190.
  • NTT Com's acquisition of an 80% stake in RagingWire Data Centers doubles its existing data center space by providing the company with an additional 650,000 square feet. The company also plans expansions in Sacramento, CA and Ashburn, VA. 

Building Presence in a Growing Industry

  • According to NTT Com, the U.S. market for data center services accounts for more than 50% of global demand and has roughly doubled between 2010 and 2013.
  • NTT Com had previously announced a goal of increasing its cloud services revenue to 200 billion yen (about $2.0 billion) by 2016 - twice its 2011 revenue in the space. 
  • The transaction follows on the heels of IBM's acquisition of cloud computing firm SoftLayer - but NTT Com's first acquisition in this space was Verio, Inc. in 2000.
  • Since then, NTT Com has been a very acquisitive company focused on buying premium assets, and as its home market (Japan) has experienced slow growth, it has made large bets overseas.
  • Virtela and RagingWire are smart acquisitions that will position NTT Com for future growth.
For more information, see the press releases: Virtela and RagingWire.

martinwolf was not the advisor in this transaction.

About martinwolf    

 

                
             San Francisco, CA                                                Bangalore, India

With offices in San Francisco and Bangalore, India, martinwolf is a leading middle market M&A Advisory focused on companies with services-based business models. Since 1997, our team has completed more than 115 transactions in six countries. We are a five-year member of the Merrill Lynch PS Referral Network, and were selected as ICICI Bank's (India's leading private bank) exclusive strategic partner for acquiring U.S. IT companies. 

 

The firm is also a presenting sponsor of the Global IT M&A Forum

 

martinwolf is a member of FINRA and SIPC. For more information, visit www.martinwolf.com.

 

To learn more about martinwolf, contact Matthew Putzulu at mputzulu@martinwolf.com.

 

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