Interoute Bulks Up With $619M Easynet Buy

Pan-European network operator Interoute has unveiled plans to buy Easynet in a deal valuing the managed services provider at £402 million ($619 million) and aimed at bolstering Interoute's suite of cloud services for enterprise and government customers.

The deal represents the biggest in Interoute Communications Ltd. 's history and will boost annual revenues to more than €700 million ($782 million) from about €425 million ($475 million) in the 2014 financial year.

Interoute said the takeover would allow it to provide additional networking and communications services to enterprise and government customers in multiple European countries: Easynet offers services in eight major European markets as well as in the US and China.

It also believes the expertise within Easynet Ltd. will help it to win business with "new prospects across the world."

"The combined companies can offer broader and deeper connectivity options, as well as an expanded portfolio of products and services, and the acquisition will further expand an already market-leading cloud hosting capability in Europe," said Mark Thompson, Easynet's CEO, in a joint statement from the two players.

Interoute's European network is currently made up of 12 data centers, 14 virtual data centers and 31 colocation centers and it also maintains infrastructure in parts of Asia and the US.

Easynet, meanwhile, provides a range of colocation, security, voice and application performance management services to companies including energy group EDF, Bouygues (owner of Bouygues Telecom ) and clothing company Levi Strauss.

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Reports earlier this year suggested that about a quarter of all data traffic in Europe traveled over Interoute's networks, with customers including major corporations such as Coca-Cola as well as Internet players like Google (Nasdaq: GOOG) and Facebook , which buy network capacity from Interoute.

In March, Interoute announced a target of growing annual revenues to about €1 billion ($1.12 billion) over the next five years by expanding its network of European data centers through takeover activity. (See Eurobites: Interoute Gets Private Equity Boost.)

Those plans were unveiled after private equity players Aleph Capital Partners and Crestview Partners acquired a 30% stake in Interoute from Emirates International Telecommunications.

Financial details of that transaction were undisclosed but Interoute said the new private equity support would enable it to "make more acquisitions and build its business in the UK, USA and across Europe."

Interoute CEO Gareth Williams described the latest move for Easynet as the next step in the acquisition strategy.

"[It] moves us much closer to our goal of being the provider of choice to Europe's digital economy," he said in the company statement.

Interoute is looking to capitalize on soaring demand for cloud services among both corporate and public-sector organizations.

Headquartered in London, Interoute is reported to have increased sales by 2% in 2014, with core earnings rising marginally to €93 million ($104 million).

— Iain Morris, , News Editor, Light Reading