Victor Semah, with Cyxtera Technologies, and Drew Altman and Jaret Davis, with Greenberg Traurig.
Victor Semah, with Cyxtera Technologies, and Drew Altman and Jaret Davis, with Greenberg Traurig. (Photo: J. Albert Diaz/ALM)

When Terremark Worldwide Inc., founded by Miami tech pioneer Manny Medina, was sold to Verizon in 2011 for $1.4 billion, the move was part of a vertical integration trend among telecommunications companies acquiring data centers.

Now the trend has reversed, and Medina Capital, a Miami-based private equity firm led by Medina, has seized on a different group of data centers that, paired with Medina’s cybersecurity and data analytics companies, has resulted in a deal valued at $2.8 billion.

Greenberg Traurig represented longtime client Medina Capital in a joint venture with global private equity firm BC Partners and Longview Asset Management to buy CenturyLink Inc.’s data centers and associated colocation business. The joint venture also bought out Medina Capital’s security and data analytics companies.

The Miami-based joint venture, Cyxtera Technologies Inc., will operate 57 data centers and employ 1,100 people around the world, according to a company statement.

The deal, which closed May 1, includes a minority stake for CenturyLink valued at $150 million. The strategy is to blend the data centers and various cybersecurity and data analytics services from Medina Capital to offer a secure global data infrastructure platform.

Greenberg Traurig lawyers worked with Medina back in 2011, when it represented Terremark, and again on this latest deal, which was announced late last year.

“You are seeing a trend of all the telecoms divesting themselves from IT infrastructure,” said Jaret Davis, Greenberg Traurig’s co-managing shareholder in Miami, who was part of Medina’s legal team for both deals. “The telecoms as well as the market can be operated perhaps more efficiently on a standalone basis as opposed to by a larger entity.”

Davis said what set off the divestiture trend was the realization that telecoms are difficult enough to manage without dealing with distinct-though-related branches like data centers. The trend is such that in an unrelated deal, Verizon sold 29 data centers, including one it bought as part of Terremark, to Equinix in a $3.6 billion all-cash deal. Greenberg Traurig was not part of that transaction.

Data centers are buildings with fiber optics that allow customers who have equipment there to get direct connectivity to the internet infrastructure. The Medina businesses provide additional options and value to those customers, lawyers said.

The combination of data centers with cybersecurity and data analytics services is what differentiates the venture. Cyxtera says it can offer a cyber-secure global data infrastructure platform. Medina believes there is a clear market need for this, said Victor Semah, who was a Greenberg Traurig shareholder and one of the leaders on the deal but is now Cyxtera’s chief in-house legal officer.

“This new company fills that void,” Semah said.

Davis said the biggest challenge of the transaction was that it was really seven transactions rolled into one. The first was the largest­—the acquisition of Savvis Communications LLC, the entity that owns all the CenturyLink data centers. Four of the transactions involved Medina Capital’s security and analytics businesses, and two more related to financing and debt financing. The Medina Capital companies were Cryptzone Worldwide Inc., Catbird Networks Inc., Easy Solutions Enterprises Corp. and Brainspace Corporation.

“Each of those transactions was a deal of at least $100 million to almost $2.3 billion,” Davis said. “It was a complicated transaction, but a lot of fun, too.”

The debt financing was the first of its kind in that it found a way to allay fears that changes to the tax code may reduce tax deductibility of interest payments, thereby making the buyout financing more expensive, he said. If the tax code is changed within a year, Cyxtera has the option to pay back its more expensive second-lien loans at a lower price. Roughly $310 million of the $1.3 billion three-part loan are part of second-liens.

Integrating the companies’ operations was also a challenge, Davis said.

Medina, whose Miami-based private equity firm focuses on investing in companies in the cybersecurity, data analytics and IT infrastructure sectors, is also the founder and chairman of eMerge, a business-to-business technology conference event intended to promote technology industry developments in South Florida. Medina was able to make the deal happen, Davis said, because of his high credibility in the tech infrastructure market.

Davis said Miami is reaching the “critical mass of serious minded technology executives” for large scale projects to become possible.

Cyxtera will have more than 3,500 customers and 2.6 million square feet of raised floor capacity.

The financing for the transaction was underwritten by Barclays, Citigroup, Citizens, Credit Suisse, HSBC, Jefferies, JP Morgan and Macquarie.

Greenberg Traurig Miami shareholders Davis, Semah and Drew Altman led a 57-lawyer team with a core of about 15 lawyers from various practice areas. The team included shareholders Manny Valcarcel IV of Miami; Daniel D. Gordon of Chicago; Ejim Peter Achi, Audry Casusol, Stephen M. Pepper, all of New York; Todd D. Wozniak of Atlanta; Renee Latour of Washington, D.C.; Harry J. Friedman of Fort Lauderdale; Richard Cutshall of Chicago; Evan Kanter of Miami; Noam Lipshitz of Fort Lauderdale; of counsel Cyril T. Brennan of Washington, D.C.; Rachel B. Cohen-Deano of Chicago; and Miami associates Jasmine Zacharias, Maria Jose Dobles Madrigal, Taylor J. Berman and Sandy Chiu.

When Terremark Worldwide Inc., founded by Miami tech pioneer Manny Medina, was sold to Verizon in 2011 for $1.4 billion, the move was part of a vertical integration trend among telecommunications companies acquiring data centers.

Now the trend has reversed, and Medina Capital, a Miami-based private equity firm led by Medina, has seized on a different group of data centers that, paired with Medina’s cybersecurity and data analytics companies, has resulted in a deal valued at $2.8 billion.

Greenberg Traurig represented longtime client Medina Capital in a joint venture with global private equity firm BC Partners and Longview Asset Management to buy CenturyLink Inc. ‘s data centers and associated colocation business. The joint venture also bought out Medina Capital’s security and data analytics companies.

The Miami-based joint venture, Cyxtera Technologies Inc., will operate 57 data centers and employ 1,100 people around the world, according to a company statement.

The deal, which closed May 1, includes a minority stake for CenturyLink valued at $150 million. The strategy is to blend the data centers and various cybersecurity and data analytics services from Medina Capital to offer a secure global data infrastructure platform.

Greenberg Traurig lawyers worked with Medina back in 2011, when it represented Terremark, and again on this latest deal, which was announced late last year.

“You are seeing a trend of all the telecoms divesting themselves from IT infrastructure,” said Jaret Davis, Greenberg Traurig ‘s co-managing shareholder in Miami, who was part of Medina’s legal team for both deals. “The telecoms as well as the market can be operated perhaps more efficiently on a standalone basis as opposed to by a larger entity.”

Davis said what set off the divestiture trend was the realization that telecoms are difficult enough to manage without dealing with distinct-though-related branches like data centers. The trend is such that in an unrelated deal, Verizon sold 29 data centers, including one it bought as part of Terremark, to Equinix in a $3.6 billion all-cash deal. Greenberg Traurig was not part of that transaction.

Data centers are buildings with fiber optics that allow customers who have equipment there to get direct connectivity to the internet infrastructure. The Medina businesses provide additional options and value to those customers, lawyers said.

The combination of data centers with cybersecurity and data analytics services is what differentiates the venture. Cyxtera says it can offer a cyber-secure global data infrastructure platform. Medina believes there is a clear market need for this, said Victor Semah, who was a Greenberg Traurig shareholder and one of the leaders on the deal but is now Cyxtera’s chief in-house legal officer.

“This new company fills that void,” Semah said.

Davis said the biggest challenge of the transaction was that it was really seven transactions rolled into one. The first was the largest­—the acquisition of Savvis Communications LLC, the entity that owns all the CenturyLink data centers. Four of the transactions involved Medina Capital’s security and analytics businesses, and two more related to financing and debt financing. The Medina Capital companies were Cryptzone Worldwide Inc., Catbird Networks Inc., Easy Solutions Enterprises Corp. and Brainspace Corporation.

“Each of those transactions was a deal of at least $100 million to almost $2.3 billion,” Davis said. “It was a complicated transaction, but a lot of fun, too.”

The debt financing was the first of its kind in that it found a way to allay fears that changes to the tax code may reduce tax deductibility of interest payments, thereby making the buyout financing more expensive, he said. If the tax code is changed within a year, Cyxtera has the option to pay back its more expensive second-lien loans at a lower price. Roughly $310 million of the $1.3 billion three-part loan are part of second-liens.

Integrating the companies’ operations was also a challenge, Davis said.

Medina, whose Miami-based private equity firm focuses on investing in companies in the cybersecurity, data analytics and IT infrastructure sectors, is also the founder and chairman of eMerge, a business-to-business technology conference event intended to promote technology industry developments in South Florida. Medina was able to make the deal happen, Davis said, because of his high credibility in the tech infrastructure market.

Davis said Miami is reaching the “critical mass of serious minded technology executives” for large scale projects to become possible.

Cyxtera will have more than 3,500 customers and 2.6 million square feet of raised floor capacity.

The financing for the transaction was underwritten by Barclays , Citigroup , Citizens, Credit Suisse, HSBC , Jefferies, JP Morgan and Macquarie.

Greenberg Traurig Miami shareholders Davis, Semah and Drew Altman led a 57-lawyer team with a core of about 15 lawyers from various practice areas. The team included shareholders Manny Valcarcel IV of Miami; Daniel D. Gordon of Chicago; Ejim Peter Achi, Audry Casusol, Stephen M. Pepper, all of New York ; Todd D. Wozniak of Atlanta; Renee Latour of Washington, D.C.; Harry J. Friedman of Fort Lauderdale; Richard Cutshall of Chicago; Evan Kanter of Miami; Noam Lipshitz of Fort Lauderdale; of counsel Cyril T. Brennan of Washington, D.C.; Rachel B. Cohen-Deano of Chicago; and Miami associates Jasmine Zacharias, Maria Jose Dobles Madrigal, Taylor J. Berman and Sandy Chiu.