DigitalBridge to buy data center company Switch for $11 billion


May 11 (Reuters) – DigitalBridge Group Inc (DBRG.N) has agreed to buy data center operator Switch Inc (SWCH.N) for $11 billion including debt, marking the latest deal in the data center industry. digital assets that attracted significant private capital. companies and infrastructure funds.

Boca Raton, Fla.-based DigitalBridge and Australian infrastructure investor IFM Investors are teaming up to take Las Vegas-based Switch private for $34.25 per share, the companies announced Wednesday. That’s a 15% premium to Switch’s closing price on May 9 when talks of the deal were first reported.

The data center industry has become a hotbed of consolidation activity thanks to its key role in cloud computing infrastructure and strong growth prospects supported by the growing digital presence of enterprises.

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Switch is one of the last major data center operators listed on US exchanges after acquiring several others, including CyrusOne and QTS Realty Trust, in recent quarters.

Last year, CyrusOne agreed to be taken private in an $11.49 billion deal with KKR & Co Inc (KKR.N) and Global Infrastructure Partners, while Blackstone acquired QTS Realty Trust for $10 billion. Another major data center operator, CoreSite, was acquired by American Tower Corp (AMT.N) for $7.5 billion in November.

DigitalBridge rebuffed a competing bid from Brookfield Asset Management to complete the deal for Switch, people familiar with the matter said. DigitalBridge had been in talks with Switch for at least a few months, during which time the data center operator began working with advisers to explore all options, including a sale, the sources said, speaking undercover of anonymity.

Switch has more than 1,300 customers and operates and designs data centers in cities like Atlanta. Its revenue increased by a quarter in the first three months of 2022 to $164.6 million.

Switch shares closed more than 9% higher at $33.54 on Wednesday.

DigitalBridge, which invests in data centers, fiber networks and cell towers, has been on a buying spree of digital infrastructure assets in recent years. Its recent notable acquisitions include communications infrastructure company Zayo Group and cell tower operator Vertical Bridge Holdings.

The Switch deal is expected to close in the second half of 2022, after which the company will be closely owned by an affiliate of IFM Investors and DigitalBridge.

Goldman Sachs & Co and Morgan Stanley & Co acted as financial advisors to the special committee of Switch’s board of directors. RBC Capital Markets acted as lead advisor to the syndicate of buyers, while TD Securities acted as co-advisor and led the debt financing for the transaction. Societe Generale, RBC Capital Markets and Citizens Bank, NA also provided debt financing for the transaction.

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Additional reporting by Tiyashi Datta and Yuvraj Malik in Bengaluru; Editing by Aditya Soni and Will Dunham

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