Global data centre firm Cyxtera has confirmed Brookfield Infrastructure Partners L.P. and institutional partners have an agreement to acquire substantially all of the bankrupt firm’s assets for $775 million (all figures US).
The transaction, if it receives all required approvals and closes, would once again raise the stature of Toronto-based Brookfield within the rapidly growing global data centre sector. The company has already been heavily investing in the sector, including deals earlier this year to acquire major industry players Compass (in partnership with Ontario Teachers' Pension Plan) and Data4.
Under the Cyxtera asset purchase agreement and the court-supervised process, Brookfield will acquire from several owners the real estate at which seven of its U.S. data centres are located.
Cyxtera says the transactions will allow it to increase existing facility ownership, secure future expansion opportunities and strengthen its data centre platform by giving the firm more control over its cost structure.
“We are pleased to reach this agreement with Brookfield, which represents a favourable path forward for our customers, partners and employees,” Nelson Fonseca, Cyxtera’s chief executive officer, said in Wednesday’s announcement.
“Throughout our restructuring process, our business has continued to perform well, a testament to our customers’ confidence in our team and our innovative data centre platform.
“This agreement and the changes to the data centre portfolio, most importantly our increased facility ownership, will enable us to build on our business momentum and better position Cyxtera for the future.”
Cyxtera says it serves over 2,300 clients with colocation, interconnection services and digital infrastructure.
Cyxtera to sell Canadian data centres to Cologix
As part of the series of transactions, Cyxtera would sell its business in its Canadian data centres located in Montreal and Vancouver to Cologix. Denver-based Cologix is already a significant player in Canada, with 11 facilities in Montreal, five in Toronto and four in Vancouver.
In the United States, the Cyxtera transactions include an agreement with Digital Realty Trust, Inc. and Digital Core REIT for Brookfield to acquire the real estate supporting several of its data centres.
Separately, Cyxtera secured an agreement Digital Realty to amend the terms of its leases at three U.S. sites and three international sites, allowing Cyxtera to exit those sites in 2024 while providing what it promises will be a “seamless transition” for its customers.
“With Brookfield’s deep global infrastructure expertise, experienced team and demonstrated track record, we will move ahead with a partner that recognizes the strength of our business and will provide the guidance and resources to drive our next phase of growth,” Fonseca said in the announcement.
“We remain firmly committed to making this transition as seamless as possible for all our stakeholders and we look forward to continuing to serve our customers with the innovative services and high levels of support they have come to expect from Cyxtera.”
The full terms of the APA have been filed with the U.S. Bankruptcy Court for the District of New Jersey. The hearing to approve the Chapter 11 plan and transaction with Brookfield is set for Nov. 16.
The APA is also subject to regulatory approval and customary closing conditions.
The transaction with Brookfield is expected to close in the first quarter of 2024.
Brookfield and the data centre sector
The acquisition will add to an already substantial data centre presence by Brookfield.
The company reported earlier this year it would operate almost 500MW of data centre capacity after absorbing Compass and Data4 into its portfolio (excluding the Cyxtera acquisition).
During an earnings call earlier this year, Brookfield's global data centre group CEO Udhay Mathialagan said the company expects to have an additional 775MW of capacity "already contracted and reserved," which it can build out over the next few years.
In total, Brookfield expects to develop an additional gigawatt of capacity during the next three years.
The company also owns interests in data centres or data centre companies in India and throughout Latin America, Australia and New Zealand.
Brookfield Asset Management (BAM-T) is a global alternative asset manager with $850 billion of assets under management. The firm and its entities invest client capital for the long term with a focus on real assets and essential service businesses.
It offers a range of alternative investment products to investors around the world — including public and private pension plans, endowments and foundations, sovereign wealth funds, financial institutions, insurance companies and private wealth investors.
Brookfield Infrastructure Partners (BIP-UN-T) is a global infrastructure company that owns and operates assets in the utilities, transport, midstream and data sectors across North and South America, Asia Pacific and Europe.