Irish data firm in sale talks with Telecity

IRISH DATA centre provider Data Electronics is believed to be in early-stage talks about selling the business to UK-based rival Telecity Group in a deal expected to be worth £100 million.

Telecity is one of the biggest players in Europe in this sector, and is looking to expand as the popularity of “cloud” computing grows and more companies are interested in using capacity at its data centres. Revenues at Telecity rose 16 per cent last year.

Telecity, whose customers include Walkers crisps, Facebook and Transport for London, is building three new data centres in London, but it is also looking at European targets. The company has a credit facility of £300 million earmarked for expansion.

“We have seen large companies, such as financial institutions, move from owning their own data centres to leasing space from data centre companies,” said James Dodsworth, partner at Mayer Brown, the law firm which advises companies on data centre deals.

“That trend has been accelerated by the economic crisis. Businesses also have a need to manipulate larger amounts of data. Just as we are now sending e-mails on BlackBerrys, in a few years’ time it will be video calls, which will increase the amount of data that needs to be stored exponentially.

“We’re going to see a data storage explosion.”

Telecity operates 24 data centres across main European cities, including a centre near Dublin. However, it has plans to nearly double its computing capacity.

Data Electronics is one of Ireland’s largest providers of data centre services. It was founded in 1975 and has invested heavily in its two data centres near Dublin. It has recently completed a €15 million expansion of an eco-friendly data centre in north Dublin, which followed an initial €25 million investment in 2008.

Data Electronics employs 55 people and had sales of €15.6 million in 2010. This represented an increase of 11 per cent on the previous year. The company is led by chief executive Maurice Mortell.

About 65 per cent of revenues come from international clients.

US technology companies such as Microsoft, Google and Amazon operate data facilities in Ireland.

Due to rules on the transfer of data across borders, US firms often need European data centres.