CyrusOne—a Dallas-based real estate investment trust that operates over 50 high-performance data centers worldwide—has been acquired in a $15 billion cash deal.
New York-based investment firm KKR and Global Infrastructure Partners (GIP) will acquire all outstanding shares of CyrusOne for $90.50 per share to close the deal, which includes the assumption of debt. CyrusOne went public in 2013.
“This transaction is a testament to the tremendous work by the entire CyrusOne team,” said Dave Ferdman, CyrusOne’s co-founder and interim president and CEO, in a statement. “We’ve built one of the world’s leading data center companies with a presence across key U.S. and international markets supporting our customers’ mission-critical digital infrastructure requirements while creating significant value for our stockholders.”
“KKR and GIP will provide substantial additional resources and expertise to accelerate our global expansion and help us deliver the timely and reliable solutions at scale that our customers value,” Ferdman added.
Latest in a string of big private-equity deals
According to the Wall Street Journal, CyrusOne has had four CEOs in the last two years, with Ferdman stepping into the top role last July. In September, just two months after Ferdman took the helm, Reuters reported that CyrusOne was looking to be acquired.
The purchase price reflects a premium of approximately 25% to CyrusOne’s unaffected closing stock price before the Reuters report hit the wires, according to the company.
The WSJ noted that the $15 billion deal is just “the latest in a string of big private-equity deals, as buyout firms look to spend a mountain of cash from their investors.”
Only last week, software security firm McAfee was acquired for around $12 billion by a consortium led by PE firm Advent International.
‘One of the strongest data center companies in the world’
KKR Managing Director Waldemar Szlezak and Will Brilliant, a partner at GIP, praised CyrusOne’s track record and say they plan to keep expanding the company globally.
“CyrusOne has built one of the strongest data center companies in the world and has a strong track record of development and operational expertise in addition to delivering best-in-class service to its customers,” the executives said in a joint statement.
“We’re excited to work together with the company’s proven team to build on CyrusOne’s market leadership and support their customers’ growing data center infrastructure requirements,” they added. “We see numerous opportunities ahead to continue expanding CyrusOne’s footprint across key global digital gateway markets and look forward to leveraging our global resources, access to long term capital and deep expertise to support the company’s growth.”
A leader in hybrid-cloud and multi-cloud deployments
CyrusOne is a global leader in colocation, hyperscale, and build-to-suit environments that help companies enhance the strategic connection of their essential data infrastructure, the company says.
CyrusOne’s data centers focus on flexibility, enabling clients to modernize, simplify, and rapidly respond to changing demand—providing customers with “long-term stability and strategic advantage at scale.”
Acquisition followed review by CyrusOne’s board
CyrusOne’s board of directors was heavily involved in the process leading up to the sale, according to Lynn Wentworth, chair of the CyrusOne board.
“Today’s announcement is the culmination of a robust strategic review process conducted by the CyrusOne board of directors to determine the best path forward for the Company and maximize stockholder value,” Wentworth said in the statement. “This transaction provides CyrusOne stockholders with significant value and simultaneously positions the company to even better serve its customers to meet their needs in key markets around the world.”
The transaction is expected to close in the second quarter of 2022, subject to regulatory approvals and approval by CyrusOne stockholders.
When the deal is completed, CyrusOne will be a privately held company wholly owned by KKR and GIP and CyrusOne’s stock will no longer be listed on any public market.
Morgan Stanley & Co. LLC and DH Capital, LLC are acting as financial advisors to CyrusOne on the deal. Cravath, Swaine & Moore LLP, Venable LLP, and Eversheds Sutherland (International) LLP are serving as its legal counsel.
U.S. data center market expected to grow 13.8% in 2021
KKR and GIP are buying into a growing marketplace. According to Dallas-based CBRE, the U.S. data center market is expected to grow by 13.8% in 2021—with over 373MW of new data center capacity currently under construction.
“The US wholesale data center market continues to benefit from the critical role that data centers play in supporting business operations,” CBRE’s 2021 Market Outlook reports. “Continued adoption of hybrid IT and cloud services, the growth of AI technologies, and an ability to support a dispersed workforce will drive industry growth over the next several years.”
That momentum has showed up locally as well. CBRE’s Q3 2021 Dallas/Fort Worth Market Flash found that the local data center market bounced back from a sluggish first half of the year with a strong Q3 fueled by several large lease transactions. Most of those were driven by large tech/enterprise users.
Net data center absorption in DFW was 7.86 MW for the quarter, up 6.20 MW from Q2 of 2021, the report showed.
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