Digital Realty to acquire a 55% stake in Teraco, a South African data company, for $3 billion
Digital Realty to acquire a 55% stake in Teraco, a South African data company, for $3 billion
Digital Realty, an American real estate investment trust, has agreed to acquire a majority stake in Teraco Data Environments, a South African provider of data center and interconnection solutions. This is stated in a statement released by Teraco.
Teraco will own approximately 55 percent of its total equity interests after the transaction is completed in the first half of 2022. The remaining 45 percent will be held by a consortium of existing shareholders, which will include the company's management, Berkshire Partners LLC, Permira, van Rooyen Group (a subsidiary of Columbia Capital), Stepstone Ventures, and the Teraco Connect Trust, among others.
According to a statement released by Teraco, Digital Realty has entered into a definitive agreement to purchase a majority stake in Teraco from a consortium of investors led by Berkshire Partners and Permira for an undisclosed amount.
Teraco also claims that the transaction will result in a powerful combination that will continue to provide Teraco with the capital it needs to continue to expand. Furthermore, having the support of a global leader such as Digital Realty allows Teraco to benefit from the global platform's skills and knowledge while continuing to expand the Teraco ecosystem.
CEO Jan Hnizdo expressed his excitement about the company's upcoming next chapter, which will include a partnership with Digital Realty to build a truly global, scaled platform that will serve customers in Africa and beyond.
'Our combined platform will be unrivaled in its ability to serve customers across the entire spectrum while also supporting their global expansion,' says the CEO. As part of our strategy to capitalize on favorable industry trends and tremendous market opportunity, we look forward to working with the Digital Realty team to expand our state-of-the-art data center and connectivity offerings."
A deal worth a reported $3 billion dwarfs MainOne's acquisition of the company
In less than a month, Equinix acquired MainOne, a leading Nigerian and West African cable and data center service provider. MainOne is a leading provider of cable and data center services in Nigeria and West Africa. Similarly to its acquisition of Equinix, Digital Realty is expanding its presence in the African telecommunications and data space.
Teraco is valued at $3 billion in this latest transaction, according to Bloomberg, and the majority stake in the company that will be acquired by San Francisco-based Digital Realty could cost the company approximately $3 billion. Equinix, on the other hand, acquired MainOne in its entirety for $320 million, a price that many analysts considered to be excessively low by comparison.
A number of people have inquired as to whether I believe MainOne's valuation is too low, so I thought I'd share my thoughts on the subject. First, put any notions of value that have formed in your mind as a result of the recent unicorn sightings to the side for the time being.
- Ayobami (@BaldieBam)
Teraco, on the other hand, has been dubbed Africa's largest data center service provider by a country mile, according to industry analysts. The company, which is headquartered in Johannesburg and was founded in 2008, claims to operate seven high-quality facilities with a combined critical power load of 75 megawatts, serving over 600 clients, including global Internet companies, across six core ecosystems – connectivity providers, managed service providers, cloud, content, enterprise, and financial services – and across six core ecosystems – cloud, content, enterprise, and financial services.
Teraco's data centres are the most connected in Africa, with over 22,000 interconnects connecting them to one another and allowing clients to connect directly to one another. Teraco's data centres are the most connected in Africa. Accordingly, CEO A. William Stein believes that this acquisition is highly strategic because it will enhance the company's ability to serve customers around the world.
Teraco's management team will remain in place and will continue to be held accountable for the company's day-to-day operations in South Africa, according to the announcement. Existing Teraco investors are reinvesting a significant portion of their equity interests back into the corporation.
