Update 8:48am: Adds statement from Elliott Management.
Switch (NYSE:SWCH) rose 8.9% in premarket trading after DigitalBridge (NYSE:DBRG) agreed to purchase the data-center operator for about $11 billion in cash, including the assumption of debt. DigitalBridge gained 4.8%.
DigitalBridge (DBRG) and Australian infrastructure manager IFM Investors agreed to pay $34.25/share for Switch (SWCH), according to a statement. The deal represents an 11% premium to Tuesday's closing price and a 19% premium to its March 18 closing price, before a report about a potential sale was circulated.
The transaction is expected to close in the second half of this year.
Goldman Sachs and Morgan Stanley acted as financial advisors to the special committee of the board of directors of Switch, and Latham & Watkins acted as its legal counsel. RBC Capital Markets served as lead financial advisor and TD Securities served as co-advisor to DigitalBridge and IFM, and Simpson Thacher & Bartlett LLP acted as their legal counsel.
Switch announced in November that its board approved a plan for the company to convert into a real estate investment trust, or REIT, like many other data-center operators. The change followed a push from activist Elliott Management.
“We congratulate Rob Roy, Thomas Morton, Gabe Nacht and the entire Switch team on this $11 billion transaction, which represents a valuation multiple that places Switch at the top of the data center industry," Elliott managing partner Jesse Cohn and senior portfolio manager Jason Genrich said in a statement. "This terrific outcome was only made possible by more than two decades of industry leadership, marked by Rob’s differentiated approach to data center design and innovation. We are confident in Switch’s future success as a private company, in partnership with the team at Digital Bridge."
The Switch deal follows a torrent of consolidation in the data-center space in recent years including CyrusOne's (CONE) $15 billion announced sale to KKR and Global Infrastructure Partners and American Tower's (AMT) purchase of CoreSite Realty. Blackstone (BX) also purchased QTS Realty Trust for about $10 billion last year.