DigitalBridge to buy data center owner Switch for $8.38 billion

DigitalBridge to buy data center owner Switch for $8.38 billion

The latest deal in a sector profiting from the pandemic’s digital transformation is DigitalBridge Group Inc’s acquisition of data center operator Switch Inc for $8.38 billion in cash.

The transaction, which was disclosed on Wednesday, values each Switch share at $34.25, a 15% premium to the company’s closing price on May 9, when it was initially rumored.

Because of its critical role in cloud computing infrastructure and a robust growth outlook driven by enterprises’ rising digital presence, the data center industry has emerged as a hotspot of consolidation activity.

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CyrusOne decided to go private with KKR & Co Inc and Global Infrastructure Partners for $11.49 billion last year, while Blackstone bought QTS Realty Trust Inc for $10 billion.

The city of Las Vegas, Nevada According to a Bloomberg News article, numerous buyers was interested in Switch, including Brookfield Asset Management Inc.

The company serves over 1,300 customers and runs and constructs data centers in places like Atlanta. In the first three months of 2022, revenue increased by a quarter to $164.6 million.

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“Through this cooperation, we will be in a better position to continue to meet high customer demand for Switch’s environmentally sustainable Tier 5 data center infrastructure,” stated CEO Rob Roy.

Switch’s stock jumped more than 9% in premarket trading.

The switch will be closely owned by an affiliate of global infrastructure investor IFM Investors and DigitalBridge, a firm that invests in data centers, fiber networks, and cell towers after the acquisition closes in the second half of 2022.

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Switch received financial advice from Goldman Sachs & Co and Morgan Stanley & Co, while DigitalBridge received advice from RBC Capital Markets.

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