CenturyLink to sell data centers, colocation business to investor consortium

CenturyLink, Inc. (NYSE: CTL) says it has agreed sell its data centers and colocation business to funds advised by BC Partners, in a consortium that also includes Medina Capital Advisors and Longview Asset Management. CenturyLink will receive $2.15 billion in cash, subject to offsets for capital lease obligations and various working capital and other adjustments. It also will retain a minority stake worth $150 million in the resulting company.

The Tier 1 service provider will use the $2.15 billion to partly fund its recently announced acquisition of Level 3 Communications (see "CenturyLink will buy Level 3 for $34 billion"). The purchase price CenturyLink will pay for Level 3 comprises a combination of cash and stock.

The deal will see ownership of 57 data centers transfer to the consortium (see, for example, "CenturyLink expands data centers in six markets"). The data center portfolio includes approximately 195 MW of power across 2.6 million square feet of raised floor capacity. The service provider had been looking to offload its data centers and colocation business for some time.

"After conducting a thorough review process, we are pleased to have reached an agreement with BC Partners," said Glen F. Post III, CEO and president of CenturyLink. "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."

Despite not owning the data centers, CenturyLink plans to continue to use them to offer colocation services via commercial relationships it expects to create with the BC Partners/Medina-led consortium after the sale close.

"We are excited to be acquiring CenturyLink's portfolio of data center assets. CenturyLink has built and maintained an impressive global footprint of colocation data centers that is unparalleled for a portfolio of assets of this size. Led by Manny Medina and his management team at Medina Capital, these data centers will become part of a new, global secure infrastructure platform that will meet the growing and changing needs of customers today and for the future," said Justin Bateman, a managing partner at BC Partners.

The deal is expected to close during the first quarter of 2017.

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