Switch Launches Fifth Prime Campus in Texas; Agrees to Acquire Data Foundry
Company Provides Preliminary First Quarter 2021 Results
LAS VEGAS, May 3, 2021 /PRNewswire/ — Switch, Inc. (NYSE: SWCH) (“Switch”), the exascale technology infrastructure corporation, today announced that it has launched its Fifth Prime location in Texas. To launch this initiative, Switch has entered into a definitive agreement to acquire Data Foundry, Inc. (“Data Foundry”), a carrier-neutral colocation provider, for $420 million in an all cash transaction. The acquisition is expected to close by mid-2021, subject to the satisfaction of customary closing conditions, including regulatory approval.
Headquartered in Austin, Texas, and with data centers in Austin and Houston, Data Foundry is strategically located in a rapidly growing technology hub which offers a highly favorable business environment for both mature enterprises and early-stage growth companies. In addition, the transaction provides Switch with attractive future expansion opportunities in Texas, which complements and diversifies Switch’s existing geographic footprint and revenue exposure.
The acquisition of Data Foundry expands the Switch portfolio to 16 operational data centers across six locations and will anchor the company’s Fifth Prime data center campus. The acquisition will also add over 400 customer logos, offering robust cross-selling opportunities and the potential for significant customer expansion.
“We are extremely pleased to reach an agreement with Data Foundry and to announce the launch of our Fifth Prime Data Center Campus in Texas,” said Switch Founder and CEO Rob Roy. “The Data Foundry acquisition extends Switch’s national reach and enhances our ability to serve Texas and the Central U.S. region with low latency connectivity, while also providing critical geographic and revenue diversification with robust expansion potential to accelerate long-term growth and value creation.”
“Data Foundry is proud to partner with Rob Roy and the Switch team in this transaction that we believe will carry forward our company’s rich history of innovation in Texas, and will result in tremendous long-term benefits to our customers and all stakeholders of the combined business,” said Carolyn and Ron Yokubaitis, Co-Founders of Data Foundry. “Both companies share a set of core values that emphasize technology leadership, operational excellence, community involvement, and a relentless focus on customer service that will enable a seamless transition of leadership and continued success for years to come,” added Jonah Yokubaitis, also a Co-Founder of Data Foundry.
Data Foundry’s existing portfolio consists of four highly connected, multi-tenant data centers located in Austin and Houston. The Austin campus includes three current facilities with expansion capabilities up to 44 MW at full buildout.
The Houston campus has one existing data center with the ability to support 18 MW of customer power at full buildout. Switch intends to commence development on new data centers in both Austin and Houston at the end of 2021, with the first sectors available for customer deployments in 2023.
The purchase price of $420 million represents approximately 19x estimated 2021 Adjusted EBITDA, including $2 million of projected run-rate cost synergies. Switch management expects the transaction to be accretive to AFFO1 per share within its first full calendar year after closing. The transaction will be funded through a combination of cash on hand, borrowings under Switch’s fully undrawn $500 million revolving credit facility, or new debt securities.
Switch was advised by Wells Fargo Securities, LLC and Latham & Watkins LLP on the transaction. Data Foundry was advised by DH Capital, LLC and Vinson & Elkins LLP.
1 A definition of Adjusted Funds From Operations (“AFFO”) can be found in the investor presentation that accompanies this press release.