DigitalBridge purchases Switch for $11 billion USD

DigitalBridge has announced the acquisition of all outstanding common shares of data centre company Switch in a cash transaction estimated at $11 billion USD. The acquisition will be completed by a subsidiary of DigitalBridge, DigitalBridge II, and IFM Investors, a global digital infrastructure investment firm.

The deal still hinges on stockholder approval; but when that is achieved the acquisition will take the formerly publicly-traded company private. Switch Founder and CEO, Rob Roy, noted that the announcement of acquisition is aligned with the company’s long-term growth strategy.

“Through this partnership we will be ideally positioned to continue to meet strong customer demand for Switch’s environmentally sustainable Tier 5 data centre infrastructure. Following our expansion into a Fifth Prime campus last year and with our plan to construct more than 11 million additional square feet of capacity through 2030, Switch’s strategic position has never been stronger.”

“The combination of our advanced data centre infrastructure, significant expansion capacity in our land bank, and a new partnership with experienced digital infrastructure investors lays a strong foundation for Switch’s continued industry-leading growth.

Prior to the DigitalBridge announcement, alternative asset management company Brookfield was eyeing a Switch takeover, according to Bloomberg. At that time, Switch stock was valued at $31 per share, which would put the cost to take over common shares at $8 billion. Instead, the DigitalBridge deal was made at a stock price of $34.25, which raised the valuation to $11 billion.

Just last month, DigitalBridge acquired AMP capital’s global infrastructure business, which comprises $5.5 billion in assets under management. Marc Ganzi, CEO of DigitalBridge, noted that this acquisition accelerates the company’s growth plan. “In addition … we are empowering a team of high-caliber investment professionals who share our commitment to delivering strong long-term returns for investors and have significant experience investing in the value-added mid-market infrastructure directly adjacent to our flagship equity business.”

Upon the announcement of the plan to acquire the company, Switch cancelled its first-quarter 2022 earnings call, however, they did share the news that revenue was up more than 25% over the same quarter in 2021. On the strength of that news and the upcoming acquisition and privatisation efforts, Switch appears to be moving in a positive direction, with a rating that was changed from ‘sell’ to ‘hold’ by Zacks