:DigitalBridge Group Inc is taking data center operator Switch Inc private for $8.38 billion in cash, the latest deal in a sector benefiting from the digital shift spurred by the pandemic.
The transaction announced on Wednesday values each share of Switch at $34.25, a premium of 15 per cent to the company’s closing price on May 9 when talks of it were first reported.
The data center industry has emerged as a hotbed of consolidation activity thanks to its key role in cloud computing infrastructure and a strong growth outlook underpinned by the increasing digital presence of businesses.
CyrusOne last year agreed to go private in a $11.49 billion deal with KKR & Co Inc and Global Infrastructure Partners, while Blackstone snapped up QTS Realty Trust Inc for $10 billion.
Las Vegas, Nevada-based Switch was itself the subject of interest from multiple buyers including Brookfield Asset Management Inc, according to a Bloomberg News report.
The company has more than 1,300 customers and operates and designs data centers in cities such as Atlanta. Its revenue rose by a quarter in the first three months of 2022 to $164.6 million.
“Through this partnership we will be ideally positioned to continue to meet strong customer demand for Switch’s environmentally sustainable Tier 5 data center infrastructure,” Chief Executive Officer Rob Roy said.(https://reut.rs/3w3qVRW)
Switch’s shares rose more than 9 per cent in premarket trading.
The deal is expected to close in the second half of 2022, after which Switch will be closely held by an affiliate of global infrastructure investor IFM Investors and DigitalBridge – a firm that invests in data centers, fiber networks and cell towers.
Goldman Sachs & Co and Morgan Stanley & Co acted as financial advisors to Switch, while RBC Capital Markets was the lead financial advisor to DigitalBridge.