Telecom confirms Revera purchase
Telecom has acquired Wellington-based data centre company Revera for $96.5 million, three weeks after Revera confirmed the two companies were in talks.
The deal gives Telecom a route back into the market hosting information technology infrastructure for government agencies after subsidiary Gen-i missed out on an "all-of-government" tender in 2010.
Revera employs 140 staff and operates five data centres in Auckland, Wellington, Christchurch and Hamilton.
Telecom chief executive Simon Moutter said the acquisition would "add a respected brand that deepens our IT services portfolio for business customers, particularly with regards to cloud services".
"Both Gen-i and Revera will be better positioned to respond to evolving customer needs in the areas of big data and cloud computing," he said.
Telecom is expected to next month confirm plans to lay off about 1000 of its 7500 staff but Moutter said it would run Revera as "a standalone business" and keep its brand.
The deal is expected to mean Telecom will not press ahead with plans to build a new data centre in Wellington to supplement recent investments in new facilities in Auckland and Christchurch, because Revera opened a new data centre in Upper Hutt last year.
Revera, formerly called HDS, was created in 2002 through the management buy-out of a 51 per cent share in Japan's Hitachi Data Systems. The buy-out was led by present Revera directors Wayne Norrie and Roger Cockayne. Hitachi sold its remaining stake in the company in 2005.
The company scored a coup in 2010 when it was selected alongside Datacom and IBM to host information technology infrastructure for government agencies under an "all-of-government" contract negotiated by Internal Affairs.
It has 31 shareholders, with the Norrie and Cockayne families owning half the company.
The takeover by Telecom is expected to be completed next month.
Revera chief executive Robin Cockayne, the son of Roger Cockayne, said the Telecom takeover was the best endorsement possible of the vision behind the management buy-out.
"Revera is one of a few cloud-focused infrastructure providers in New Zealand."
"However, leading this market requires continued development of new data centres and services. We've enjoyed spectacular growth. But sustaining our momentum requires new investment and resources. This transaction ticks those boxes and helps Revera to build on its success so far."
Revera earned total revenues of about $50m in the year to March 31, with earnings before interest, tax, depreciation and amortisation of $13m - expected to rise to $15m this year.