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Cincinnati Bell’s Data Center Subsidiary To IPO

CyrusOne, which Cincinnati Bell bought for $525 million, could be valued at about $1.5 billion

Cincinnati Bell, the last American company to use the old Bell name, is going to spin off its data center colocation subsidiary CyrusOne and has filed an S-11 with the SEC for the unit to go public.

When it does go public - possibly by the end of the year - it will be structured as a REIT for the tax advantages. It wants to own all its facilities outright.

Morgan Stanley, BofA Merrill Lynch, Deutsche Bank Securities and Barclays are supposed to manage the affair.

It's expected that CyrusOne, which Cincinnati Bell bought two years ago for $525 million, could be valued at about $1 billion-$1.5 billion after the IPO and will represent another rival for companies like Rackspace and Equinox.

It is unclear what resources it will take to market. It services the Fortune500, particularly the energy crowd, and so has substantial operations in Texas as well as sites in Chicago, London and Singapore.

Altogether it has 23 data centers and room to spare.

It has been growing at the rate of 20% a year and investing for growth. CyrusOne has $986.8 million in assets and $565.6 million in debt. It made $1.5 million last year on $181.7 million in revenues. Sales grew 42% in 2011 and operating profit more than doubled to $38 million.

The not-unexpected announcement said part of the expected $300 million raised by the IPO will be used to repay CyrusOne's debt to Cincinnati Bell, which has $2.55 billion in debts of its own to pay off.

CyrusOne reportedly represents about 15% of Cincinnati Bell's business. The telco will retain a 9.1% interest.

CyrusOne's ticker symbol will be CONE.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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