CenturyLink, data centres and a rather intriguing deal

Written by on November 10, 2016 in Guest Blog with 0 Comments
 Jesus Cervantes / Shutterstock.com

Jesus Cervantes / Shutterstock.com

As part of its $34bn acquisition by Level 3 Communications, US telco CenturyLink is offloading 57 data centers to a consortium of private equity firms for around $2.15bn. This consortium, led by BC Partners and Medina Capital, have also announced their acquisition of Brainspace, a machine-learning and analytics outfit from Texas, and plan to combine Brainspace with these data centers and Medina’s other security and data analytics companies to create a rather powerful software and cybersecurity service provider.

It’s a somewhat convoluted deal, which Medina values at $2.8bn total. The other businesses, owned by Medina, which will be included in the new joint venture include Cryptzone, Catbird, and Easy Solutions. With Brainspace’s experience in processing and analyzing unstructred data sets, as well as the IP from Medina’s portfolio and the new data center footprint, this is an almost-$3bn deal that is getting weirdly little coverage from the press.

On paper, it looks like the new company will be led by an experienced team with a history of success, entering a market that is cited for strong growth. As there’s so little to go on, you won’t hear much about this deal in the news, at least until there’s a brand to prime for SEO results – but this is nonetheless a very large deal for enterprise IT, an industry that is just about getting to grips with the scale of the IoT.

Cryptzone is a software-defined perimeter services provider, which manages user access to secure enterprise systems running on physical devices or in cloud infrastructure. Catbird provides policy enforcement and infrastructure visualization software, and Easy Solutions specializes in detection and prevention software, with an authentication platform and a transaction anomaly detection system.

BC and Medina say that the new firm will become an immediate leader in the global co-location market, thanks to its 3,500 customers and 2.6m square-feet of data center capacity – using around 195MW of power to keep all that equipment running. It’s worth noting that there isn’t a company name or brand yet, which is expected to be announced at a later date.

This sounds like rather big news for the enterprise software market, although we won’t be able to judge the success of the new company until it starts publishing results. VC firms are typically very careful with their cash, and so the $2.8bn decision to jump into a market populated by the giants of IT should have been made on the back of some very careful deliberation.
BC and Medina cite a Gartner report as justification of the move, which states that the information security market is estimated to hit $113.4bn by 2020. For those who put stock in experience, the CEO of the new company will be Manuel Medina, the founder of Medina Capital. Medina’s executive team will be joining Mr Medina, and the company notes that this team comprises the former leadership team of Terremark – a data center and cybersecurity firm that Verizon acquired in 2011, for $2bn, representing a 19x EBITDA multiple, and 5x return on equity.
“In today’s globally-connected cloud-enabled world, there is a huge challenge and untapped value in being able to surface insights, answers, and threats in unstructured data. With exponential increases in the volume, velocity, and complexity of data, the challenge seems almost insurmountable,” says Dave Copps, Brainspace’s CEO.

Copps adds that “our products directly address this need through augmented intelligence. Brainspace Discovery 5 utilizes interactive data visualization as a sort of lingua franca, connecting people with machine learning and radically improving their productivity. This new venture further validates our mission at Brainspace. With a global footprint of world-class data centers and cybersecurity expertise, Brainspace will be empowered to deliver machine learning, powerful user experiences, and next-generation investigative tools to an even larger number of enterprises and government agencies.”

Written by Alex Davies | First published  at ReTHINK IoT

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