Mar. 17, 2002 -- Switch and Data, Inc. today announced that the company has completed its acquisition of PAIX.net, the interconnection unit of Metromedia Fiber Networks.
Switch and Data, a Tampa-based provider of colocation services, paid $40 million to acquire the PAIX assets, according to bankruptcy court documents. Those assets include data centers in Atlanta, Dallas, New York, Palo Alto, Seattle, and Vienna, Va.
"This acquisition is consistent with our vision to provide the premier business-enabling marketplace for our customers," said Patricia Higgins, Switch and Data's President and CEO, who said the deal "significantly enhances the combined company's financial position."
The combined company will generate free cash flow and annual revenues of about $440,000 per employee, a 30 percent increase, according to a press release from Switch and Data.
The acquisition leaves Switch and Data with more than 30 locations and 400 customers around the United States, the company said. The PAIX data centers acquired include sites at 111 8th Avenue in New York, The Westin Building in Seattle, The Infomart in Dallas, 56 Marietta in Atlanta, 7990 Science Applications Court in Vienna, and 529 Bryant in Palo Alto.
PAIX began in 1996 as Digital Equipment Corporation's Palo Alto Internet Exchange, and was later acquired by Metromedia Fiber. In early 2002, MFN began efforts to sell PAIX, but was unable to complete a deal before it filed for Chapter 11 protection last May 20.
Switch & Data prevailed in an auction of PAIX in December, and its bid was approved by the bankruptcy court on Jan. 30.
"During the last few months we have worked closely with the PAIX management team to carefully orchestrate a swift, easy and customer-convenient integration," Higgins said in a letter to customers. "We have reviewed and adopted the best practices of each company and have integrated the management team."
"The purchase of the PAIX assets will elevate Switch and Data to the nation's dominant provider of infrastructure services to data-centric carriers, Internet access providers and enterprise customers," said Tim Guarnieri, PAIX General Manager, who will join Switch and Data as Senior Vice President of Corporate Development.
The PAIX brand will live on, becoming Switch and Data's peering and Internet exchange product line.
Analysts said the deal allows the combined entity to pursue a market opportunity.
"The market for neutral interconnection services continues to grow at a significant rate," said Andrew Schroepfer, Founder of Tier 1 Research.
"The acquisition makes sense as both companies believe in neutrality as a fundamental principle and focus on providing customers the best possible business-enabling solutions," Schroepfer added. "They also both believe in providing a marketplace where customers can interconnect to buy and sell each other's services."
Switch and Data offers neutral interconnection and colocation services to web-based businesses and Internet/telecommunications providers.