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NTT Communications to buy 2 US firms for $875M

LOS ANGELES (AP) -- NTT Communications Corp., the cloud-computing subsidiary of Japanese telecoms giant Nippon Telegraph and Telephone Corp., said Monday that it will spend $875 million to take over two U.S. companies and expand its offerings in the U.S. and abroad.

NTT Communications will spend $525 million in cash to wholly acquire Denver-based Virtela Technology Services Inc., a cloud network services company, and another $350 million to take an 80 percent stake in Sacramento, Calif.-based RagingWire Data Centers, a provider of data center services.

Virtela has 400 employees and more than 500 customers worldwide. The acquisition expands NTT Communications' global network services coverage to more than 190 countries and regions from 160.

The acquisition of RagingWire will more than double NTT Communications' data center space in the U.S., enabling it to respond to the high demand for data center services in North America. RagingWire has 300 employees.

NTT Communications will integrate its offerings with Virtela to give customers a combined offering starting next year.

It will also make use of RagingWire's patented data center designs, introducing them into its data centers worldwide.

"We are rapidly expanding our capabilities to provide cloud and telecommunications solutions worldwide," NTT Communications CEO Akira Arima said in a statement.

NTT Communications says that the U.S. market for data center services, accounting for more than half of global demand, has roughly doubled between 2010 and 2013. The Japanese company has 150 data centers worldwide, along with locations in eight U.S. cities.

RagingWire, with annual revenue of $85 million, has grown at a compounded annual rate of 30 percent. It has about 650,000 square feet of data center space in two facilities in Sacramento and Ashburn, Va. It is expanding both facilities, and has begun construction on a new 150,000 square-foot data center in Sacramento. It will soon break ground on a 78-acre parcel in Ashburn with designs to build 1.5 million square feet of data center space.