Cyxtera to merge with special-purpose acquisition company valued at $3.4bn

23 February 2021 | Abigail Opiah


Data centre colocation company Cyxtera Technologies has announced a merger with Starboard Value Acquisition Corp. (SVAC) (NASDAQ: SVAC), with plans to become a publicly-traded company.

The merger implies an enterprise value of approximately $3.4 billion and upon completion of the transaction, the current owners of Cyxtera will retain approximately 58% ownership of the combined company.

The combined company will operate as Cyxtera and expects its common stock to be listed on The Nasdaq Stock Market (the Nasdaq) under the symbol “CYXT” and its warrants under the symbol “CYXTW”.

Formed through the 2017 carve-out of CenturyLink’s (now Lumen) data centre and colocation business, Cyxtera now has a footprint of 61 data centres in 29 markets around the world.

“In 2017 we identified a huge opportunity – a premium portfolio of high-quality data centre 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 Founder and Managing Partner of Medina Capital.

“Nearly four years later, not only has our experienced team successfully deployed new core systems, a new salesforce and a new brand, we have implemented our strategy to provide deeply connected and intelligently automated infrastructure solutions to businesses around the world.

“Now, as a new Cyxtera enters its growth chapter, we’re thrilled to partner with Jeff Smith and the SVAC team.

“In addition to helping accelerate our growth along multiple vectors, Starboard’s deep expertise across corporate governance, operational excellence, and capital allocation will immediately benefit us as a public company, as we drive long-term value creation.”

Upon completion of the transaction, the combined company will be the third-largest publicly held global provider of retail colocation and interconnection services.

Cyxtera generated estimated revenues of $690 million and Adjusted EBITDA of $213 million in 2020, its first full year of stable operations following the completion of the carve-out.

“At Cyxtera we’ve built a data centre 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,” said Nelson Fonseca, CEO of Cyxtera.

“By merging with SVAC, we are able to accelerate our plans to drive high-margin growth by increasing utilisation of our existing assets, developing innovative product offerings, and expanding our global footprint.

“Our management team’s experience in successfully building and operating a publicly traded data centre company with a significant presence in international markets ensures that the additional capital will be efficiently allocated to effectively build on our world-class platform, accelerate growth, and create long-term shareholder value.”

Starboard has an 18-year history of public market investing and has experience in the technology sector, including in the digital infrastructure industry.

Jeff Smith, Chair of SVAC and CEO of Starboard, said, “Cyxtera is at an exciting inflection point, poised for significantly improved growth and profitability in an industry with powerful secular tailwinds. Cyxtera’s world-class team, led by Manny and Nelson, has built a high-performance, trusted, and reliable global platform, without losing their customer focus or passion for innovation.

“Cyxtera is exactly the kind of opportunity we were targeting when we created SVAC. We look forward to partnering with the Cyxtera and BC Partners teams to grow the Company and create value for our shareholders, employees, customers, and partners.”

Cyxtera’s leadership, including Executive Chair Manuel D. Medina, CEO Nelson Fonseca, COO Randy Rowland, and CFO Carlos Sagasta, will continue to lead the colocation company, with Medina and Fonseca also serving on the board of the combined company as Chair and Director.

SVAC Chair Jeff Smith and Industry Advisor Greg Waters will join the combined company’s board as Independent and Lead Independent Directors, upon completion of the merger.

BC Partners’ Partner, Chairman, and Chairman of the Executive Committee Raymond Svider and Partner Fahim Ahmed will also serve on the combined company’s board.

“As part of the original investment group that helped launch Cyxtera, we’ve been firm believers in the power of Cyxtera’s model and the Company’s growth potential since its founding,” said Fahim Ahmed, Partner at BC Partners.

“Cyxtera offers a powerful combination of a global platform in top-tier markets, a blue-chip customer base, innovative service offerings, and dynamic partner ecosystems.

“This merger with SVAC enhances the leadership team’s ability to deliver innovative solutions to clients and expands the scale of Cyxtera’s opportunity.”