Infrastructure Investment Partners Buy Data Center Player Switch

Infrastructure investment firm DigitalBridge Group and Australia-based infrastructure manager IFM Investors are partnering to acquire US data center operator Switch in an $8.4B deal.

In a joint statement, the companies said they offered $34.25 per share for Switch, representing a 19% premium on Switch’s closing price as of March 18. The deal is expected to close in the second half of the year.

According to a report in Bloomberg, the DigitalBridge consortium beat out a rival bid from Brookfield Asset Management. 

The board of directors of Las Vegas-based Switch, which operates a 1.3-million SF data center at its Citadel campus in the Tahoe Reno Industrial Center—the nation’s largest industrial park, adjacent to Tesla’s EV battery gigafactory—voted unanimously in November to convert to a REIT by the end of this year.

In deciding to accept the infrastructure investment consortium’s bid to take the company private, Switch said the move would accelerate the company’s long-term vision for growth, which is built around its 100% renewable energy-powered data center platform.

“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,” Rob Roy, Switch’s CEO, said in a statement.

“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,” Roy added.

“The combination of our advanced data center 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 growth,” Roy said.

Mergers and acquisitions of data-center players have been accelerating in recent months due to the red-hot sector’s fragmented nature.

Switch has been marketing itself as one of the most sustainable data center players in the West. Several upgrades are being planned at the Citadel campus this year, including a 7.2-million SF expansion of IT capacity and a new 16-mile pipeline that will deliver 4,000 acre-feet of treated effluent water from the Truckee Meadows Water Reclamation Facility in Sparks, NV.

Extreme heat and drought in the Western US are making water conservation an urgent priority for data centers, which are huge consumers of water as well as electricity. A large data center can consume up to five million gallons of water per day to keep its server farm cool, the same amount that could serve the daily water needs of a city of 50,000.

“This innovative solution [lets us] operate mission-critical technology infrastructure in the most sustainable way using 100 percent recycled water to protect the area’s precious natural resources,” said Switch President Thomas Morton, at the pipeline announcement.