Switch allegedly misled investors over $11bn buyout
Datacentre operator Switch reportedly misled investors by not disclosing key financial details as it pursued a US$11 billion deal with DigitalBridge Group and IFM Investors.
Two cases have been filed by shareholders Marc Waterman and Denise Redfield in the Federal Court in New York.
Both filings have asked the Court to put the deal on hold or to force Switch to issue a new proxy statement that sets out all of the accurate information.
They claim that the initial statement omitted key details of the analysis performed by Goldman Sachs, the company that acted as Switch’s financial advisor during negotiations for the deal.
This reportedly includes underlying financial projections such as net debt and information regarding fully diluted shares.
It was announced in May that Switch would be bought by DigitalBridge for around US$11 billion and if the deal goes ahead, the company will be taken private.
The deal was initially expected to be closed in 2022, but this is in doubt given the two separate filings.
After the deal was announced, CEO of Switch Rob Roy said the deal was an important step for the growth and evolution of the company.
"The combination of our advanced datacentre infrastructure, significant expansion capacity in our land bank, and a new partnership with experienced digital infrastructure investors lays a strong foundation,” Roy said at the time.
Mar Ganzi’s DigitalBridge, meanwhile, has been extremely busy in recent months, having also agreed to buy Chilean FTTH provider Mundo in February and Telenet TowerCo in March.