Savvis Buys Canadian Cloud Services Provider

By Chris Preimesberger  |  Posted 2010-06-01

Savvis, a rising international provider of enterprise cloud infrastructure and hosted IT services, on June 1 revealed that it is acquiring Fusepoint, an independent provider of managed IT and colocation services to enterprises based in Canada, for $124.5 million in cash.

Fusepoint, a portfolio company of M/C Venture Partners, operates three data centers in Toronto, Vancouver and Montreal and has about 330 enterprise cloud-computing and storage customers.

Town and Country, Mo.-based Savvis services about 2,500 clients, including 30 of the top 100 companies in the Fortune 500.

Fusepoint's data centers have a total of more than 40,000 sellable square feet, with Toronto the largest at 28,000, Savvis said. During the past few years, the company has made significant investments in its facilities, resulting in improved services, Savvis said.

Based on its Q1 2010 results, Fusepoint's annualized revenue is projected to be about $47.4 million, Savvis said.

Since 2006, Fusepoint has generated an overall revenue annual growth rate of 18 percent, Savvis said. The company reported $41.7 million in revenue in 2009.

"The acquisition of Fusepoint is a step toward one of our most important goals to expand our geographic presence around the world," Savvis Chairman and CEO Jim Ousley said.

"Our largest customers have been asking us to expand into Canada, and the acquisition of Fusepoint allows us to do so in a seamless and efficient manner. Our best-in-class product set and strong vertical market focus meshes well with Fusepoint's fast growth and deep penetration of Canadian enterprises."

Due to the fast-growing nature of the cloud computing and data center colocation market, this deal might well mark the beginning of a series of consolidations in this sector, Yankee Group industry analyst Zeus Kerravala told eWEEK.

"Look at how all the telcos grew -- they mostly bought smaller companies, which gave them instant customers and a lot of best practices as a result," Kerravala said. "The telcos have a lot of money but don't do a lot of innovation.

"It's not that different in the cloud computing and services sector. This might mark the start of a trend of sorts."

The acquisition is expected to close early this summer, Savvis said.

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