Acquisitions

9 Months Ended

Sep. 30, 2023

Business Combination and Asset Acquisition [Abstract]

2022 Acquisitions

Acquisition of Entel Chile Data Centers (the "Entel Chile Acquisition") and Entel Peru Data Center (the "Entel Peru Acquisition")

On May 2, 2022, we further expanded in Latin America through an acquisition of four data centers in Chile from Entel, a leading Chilean telecommunications provider, for a total purchase consideration of $638.3 million at the exchange rate in effect on that date. On August 1, 2022, we completed the acquisition of a data center in Peru from Entel for a total purchase consideration of $80.3 million at the exchange rate in effect on that date. The Entel Chile Acquisition and Entel Peru Acquisition support our ongoing expansion to meet customer demand in the Latin American market.

Acquisition of MainOne (the "MainOne Acquisition")

On April 1, 2022, we completed the acquisition of all outstanding shares of MainOne, which consisted of four data centers as well as a subsea cable and terrestrial fiber network. We acquired MainOne and its assets for a total purchase consideration of $278.4 million. The MainOne Acquisition supports our ongoing expansion to meet customer demand in the West African market.

Purchase Price Allocation

Each of the acquisitions noted above constitute a business under the accounting standard for business combinations and, therefore, were accounted for as business combinations using the acquisition method of accounting. Under this method, the total purchase price is allocated to the assets acquired and liabilities assumed measured at fair value on the date of acquisition, except where alternative measurement is required under GAAP.

During the nine months ended September 30, 2023, we completed the detailed valuation analysis and the final allocation of purchase price for the Entel Chile, Entel Peru, and MainOne Acquisitions.

A summary of the final allocation of total purchase consideration is presented as follows (in thousands):


	Entel Chile		Entel Peru		MainOne
Cash and cash equivalents	$	—	$	—	$	33,026
Accounts receivable	—		—		9,431
Other current assets	12,424		—		21,988
Property, plant and equipment	81,132		13,423		239,583

Intangible assets	153,489		10,000		54,800
Goodwill	380,867		46,285		110,665
Deferred tax and other assets	12,090		10,801		5,879
Total assets acquired	640,002		80,509		475,372
Accounts payable and accrued liabilities	(195)		—		(18,525)
Other current liabilities (1)	—		—		(13,061)


Mortgage and loans payable	—		—		(25,944)
Deferred tax and other liabilities (1)	(1,463)		(167)		(139,492)
Net assets acquired	$	638,344	$	80,342	$	278,350

(1)For the MainOne Acquisition, other current liabilities includes $9.9 million of deferred revenue - current and the other liabilities includes $95.4 million of deferred revenue - non-current.

Property, plant and equipment - The fair values of property, plant and equipment acquired from these three acquisitions were estimated by applying the cost approach, with the exception of land, which we estimated by applying the market approach. The key assumptions of the cost approach include replacement cost new, physical deterioration, functional and economic obsolescence, economic useful life, remaining useful life, age and effective age.

Intangible assets - The following table presents certain information on the acquired intangible assets (in thousands):


Intangible Assets	Fair Value		Estimated Useful Lives (Years)	Weighted-average Estimated Useful Lives (Years)	Discount Rate
Entel Chile:
Customer relationships (1)	$	153,489	12.0 - 15.0	14.0	8.5% - 9.5%
Entel Peru:
Customer relationships (1)	10,000		15.0	15.0	7.0	%
MainOne:
Customer relationships (1)	51,500		10.0 - 15.0	14.0	11.5	%
Trade names (2)	3,300		5.0	5.0	11.5	%

(1)The fair value was estimated by calculating the present value of estimated future operating cash flows generated from existing customers less costs to realize the revenue and/or by using benchmarking. The rates reflect the nature of the assets as they relate to the risk and uncertainty of the estimated future operating cash flows, as well as the risk of the country within which the acquired business operates.

(2)The fair value of the MainOne trade name was estimated using the relief from royalty method under the income approach. We applied a relief from royalty rate of 1.0%.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed. Goodwill is attributable to the workforce of the acquired business and the projected revenue increase expected to arise from future customers after the acquisition. Goodwill from the Entel Chile and Entel Peru acquisitions is attributable to the Americas region. Goodwill from the Entel Chile acquisition is amortizable for local tax purposes, while goodwill from the Entel Peru acquisition is not expected to be amortizable for local tax purposes. Goodwill from the MainOne Acquisition is attributable to the EMEA region and is generally not deductible for local tax purposes.