Data center colocation provider Cyxtera Technologies plans to go public at a $3.4 billion valuation through a merger with a special purpose acquisition company, an increasingly popular way for companies to become publicly traded.
The Coral Gables, Fla.-based company said Monday that it has entered into a definitive agreement to merge with Starboard Value Acquisition Corp., a publicly traded special purpose acquisition company, or SPAC, as they are more commonly known. The company operates 61 data centers across 29 markets worldwide and counts more than 2,300 enterprises, service providers and government agencies as customers, including Cognizant, Capgemini, Nvidia, Fujitsu and Cloudflare.
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The merger is expected to close by midyear and will make the combined company—which will take Cyxtera’s name and trade under “CYXT” on Nasdaq—the third largest publicly traded global provider of retail colocation and interconnection services, according to Cyxtera and Starboard. In 2020, the company said it had estimated revenue of $690 million and net income of $213 million without interest, taxes, depreciation and amortization taken into account.
Cyxtera was formed in 2017 through the merger of 57 data centers owned by CenturyLink, now known as Lumen Technologies, with four cybersecurity and data analytics companies—Cryptzone, Easy Solutions, Catbird and Brainspace. Then in 2020, the company spun out a secure access vendor called Appgate, which also plans to go public this year, by merging with a shell company.
The formation of Cyxtera was orchestrated by private equity firms Medina Capital and BC Partners. One hundred percent of their current equity stakes of Cyxtera will roll into the combined company. This will translate into approximately 58 percent ownership of the combined company for Cyxtera’s owners.
The boards of Cyxtera and Starboard Value Acquisition Corp. have unanimously approved the deal, but it awaits approval by stockholders of the latter company.
“In 2017 we identified a huge opportunity—a premium portfolio of high-quality data center assets with the potential to become a leading global provider in the highly attractive retail colocation market,” said Manuel D. Medina, executive chair of Cyxtera and managing partner of Medina Capital, in a statement. “Nearly four years later, not only has our experienced team successfully deployed new core systems, a new sales force and a new brand, we have implemented our strategy to provide deeply connected and intelligently automated infrastructure solutions to businesses around the world.”
Cxytera will maintain its existing leadership team, with Medina as executive chair, Nelson Fonseca as CEO, Randy Rowland as COO and Carlos Sagasta as CFO. Medina and Fonseca will also continue to serve on the company’s board as chair and director, respectively. The board is adding Jeff Smith, chair of the SPAC and CEO of Starboard Value LP, a New York-based hedge fund that formed the SPAC. Greg Waters, an industry adviser, will serve alongside Smith as independent and lead independent directors, respectively. Also joining the board will be Fahim Ahmed, partner at BC Partners, and Raymond Svider, who is partner and chairman at BC Partners.
“At Cyxtera we’ve built a data center platform that’s ideally positioned to deliver the type of differentiated solutions that enterprises, service providers, and government customers require to meet their ever-changing infrastructure needs,” Fonseca said in a statement. “By merging with SVAC, we are able to accelerate our plans to drive high-margin growth by increasing utilization of our existing assets, developing innovative product offerings and expanding our global footprint.”
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