Canadian B2B operator TeraGo has bought enterprise cloud service provider RackForce Networks for an enterprise value of C$33m (US$26m).
TeraGo has amended its credit agreements to fund the acquisition, taking its facilities up from C$50m to C$85m.
It…
Canadian B2B operator TeraGo has bought enterprise cloud service provider RackForce Networks for an enterprise value of C$33m (US$26m).
TeraGo has amended its credit agreements to fund the acquisition, taking its facilities up from C$50m to C$85m.
It is paying C$31m in cash and C$2m in common shares for Rackspace, which together represents a multiple of 9.9x adjusted EBITDA annualised for the three months ended 31 December 2014.
National Bank Financial advised TeraGo on the deal while RackForce mandated RBC Capital Markets.
“The RackForce acquisition provides TeraGo with a growth platform in the attractive cloud services industry and helps further position TeraGo as a leading national end-to-end data solution company,” Stewart Lyons, president and CEO of TeraGo, said.
“RackForce will complement our business and transforms TeraGo into Canada’s premier enterprise class network, data, voice and cloud services provider.”
Now the transaction has closed TeraGo’s data centre footprint has expanded by 18,000 sq ft to give it 58,000 sq ft of raised floor space, and its available power has risen from 6MW to 13MW.
TeraGo said that RackForce serves a number of high-value enterprise customers across a variety of verticals, including K-12, advanced education, and, federal and provincial governments.
Last summer TeraGo, which provides broadband and voice services to small and medium-sized businesses, announced its entry into the cloud space. It said that the growth potential for data centre services is significant.
Following the amendment of its credit agreements, Toronto-based TeraGo now has a C$10m revolving operating credit facility, a C$50m non-revolving term credit facility and a C$25m non-revolving acquisitions and capital expenditure facility, all of which now expire in 2018. The Toronto-Dominion Bank has become a party to the facilities, alongside existing lenders National Bank of Canada and Royal Bank of Canada.
