Kelowna tech company RackForce sold for $33 million

"We warmly welcome RackForce professionals and we are excited to enter into a new phase of our business at TeraGo."

RackForce Networks, the largest Canadian enterprise cloud service provider that services national and global clients from its Kelowna-based GigaCenter, has entered into a definitive share purchase agreement with TeraGo Inc., a national provider of complete end-to-end data solutions.

Under the deal, TeraGo will will acquire 100 per cent of the issued and outstanding shares of RackForce for aggregate cash consideration of $31.0 million and $2.0 million of common shares of TeraGo.

RackForce’s GigaCenter in Kelowna increases TeraGo’s data center footprint from 40,000 to 58,000 square feet of raised floor space and available power from 6MW to approximately 13MW.

“The RackForce acquisition provides TeraGo with a growth platform in the attractive cloud services industry and helps further position TeraGo as a leading national end-to-end data solution company,” said TeraGo’s President and Chief Executive Officer Stewart Lyons, in a press release.

“RackForce will complement our business and transforms TeraGo into Canada’s premier enterprise class network, data, voice and cloud services provider.”

RackForce serves multiple high value enterprise customers across numerous verticals, including federal and provincial governments, and education. RackForce’s top-25 customers generate average monthly revenue  of over $17,000.

“We recognize the value, expertise and experience RackForce exhibits as a proven cloud partner for enterprise clients running mission-critical applications,” Lyons continued. “We warmly welcome RackForce professionals and we are excited to enter into a new phase of our business at TeraGo.”

The Acquisition is expected to close on or about March 27, 2015. The aggregate purchase price of $33.0 million represents a multiple of approximately 9.9x adjusted EBITDA annualized for the three months ended December 31, 2014. The Acquisition will be financed with cash to be made available under the Company’s credit facilities.