DigitalBridge to buy data center operator Switch for $8.38 bn

DigitalBridge Group is buying data center operator Switch for $8.38 billion in cash.
Dollar spending on technology
The transaction values each share of Switch at $34.25, a premium of 15 percent 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 and Global Infrastructure Partners, while Blackstone snapped up QTS Realty Trust for $10 billion, said a Reuters news report.

Las Vegas, Nevada-based Switch was the subject of interest from multiple buyers including Brookfield Asset Management, according to a Bloomberg News report.

Switch 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,” Switch Chief Executive Officer Rob Roy said.

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.