Data Center REITs CyrusOne, CoreSite to Sell for Combined $25B in Two Separate Mega Deals
DALLAS AND DENVER — In two separate transactions exceeding $25 billion in value, data center REITs CyrusOne Inc. (NASDAQ: CONE) and CoreSite Realty Corp. (NYSE: COR) have agreed to be acquired.
KKR and Global Infrastructure Partners (GIP) are teaming up to acquire all outstanding shares of common stock for CyrusOne at $90.50 per share for a deal value of approximately $15 billion, including the assumption of debt.
In the other mega transaction, telecommunications firm American Tower Corp. (NYSE: AMT) has agreed to acquire Denver-based CoreSite for $170 per share in cash. The total consideration for the transaction is approximately $10.1 billion, including the assumption and/or repayment of CoreSite’s existing debt at closing.
The purchase price for CyrusOne, a Dallas-based company that owns and operates 50 data centers worldwide, reflects an approximately 25 percent premium over CyrusOne’s stock price on Sept. 27, which was the last day of trading before market speculation of a potential sale was published.
KKR and GIP plan to grow CyrusOne’s global footprint of data centers following the closing of the acquisition. The company’s provides IT infrastructure for more than 1,000 clients, including 200 Fortune 1000 companies, according to CyrusOne.
The transaction, which CyrusOne’s board of directors unanimously approved, is expected to close in the second quarter of 2022, subject to customary closing conditions, including regulatory approvals and approval by CyrusOne stockholders.
Upon completion of the transaction, CyrusOne will be a privately held company wholly owned by KKR and GIP, and CyrusOne’s common stock will no longer be listed on any public market. KKR’s investment is being made primarily from its global infrastructure and real estate equity strategies, and GIP’s investment is being made from its global infrastructure funds.
CyrusOne’s stock price closed on Monday, Nov. 15 at $89.45 per share, up from $71.96 a year ago, a 24.3 percent jump.
For the second deal, AMT, a Boston-based REIT, was attracted to CoreSite’s revenue stream as the company has averaged double-digit annual revenue growth over the past five years.
As of third-quarter 2021, CoreSite’s portfolio spanned 25 data centers, 21 cloud on-ramps and over 32,000 interconnections in eight major U.S. markets. American Tower hopes to leverage its strong financial position and existing portfolio of 219,000 telecommunication sites to grow the combined company to support customers’ evolving needs for both wireless and wireline services.
“We are in the early stages of a cloud-based, connected and globally distributed digital transformation that will evolve over the next decade and beyond,” says Tom Bartlett, CEO of American Tower. “We expect the combination of our leading global distributed real estate portfolio and CoreSite’s high-quality, interconnection-focused data center business to help position American Tower to lead in the 5G world.”
American Tower hopes to scale CoreSite’s data center pipeline domestically and also explore international opportunities in the years to come.
The boards of directors for both firms have unanimously approved the transaction. American Tower has obtained committed financing from J.P. Morgan, which is acting as American Tower’s lead financial advisor. The transaction is anticipated to close before the end of the year or shortly thereafter, according to American Tower.
CoreSite’s stock price closed on Monday at $172.51 per share, up from $127.67 a year ago, a 35.1 percent hike.
American Tower’s stock price closed on Monday at $260.50, up from $239.09 a year ago, a nearly 9 percent increase.
— John Nelson