- Combined company will be third-largest publicly held global
provider of retail colocation and interconnection services, with 61
data centers in 29 markets around the world, serving more than
2,300 leading enterprises, service providers, and government
agencies
- Existing owners, including BC Partners and Medina Capital,
rolling 100% of current equity stakes into the combined
company
- Manuel Medina and Nelson Fonseca, who previously built and
successfully ran Terremark Worldwide until its sale to Verizon, to
continue in current roles as Chair and CEO, respectively
- Combined company board to include representatives of Starboard
Value Acquisition Corp. (“SVAC”) and continuing BC Partners
directors, representing shareholders and providing deep expertise
across technology, corporate governance, operational execution
- SVAC Chair Jeff Smith and Industry Advisor Greg Waters to join
combined company’s board as Independent Director and Lead
Independent Director, respectively
- By merging with SVAC, Cyxtera to gain access to new capital
sources to fuel growth, accelerate product and technology
innovation, enhance its ability to quickly meet customer needs, and
further support strategic go-to-market efforts
- Proceeds of approximately $654 million to include commitments
for $250 million private placement of common stock of SVAC (PIPE)
from institutional investors, including Fidelity Management &
Research Company LLC, and clients of Starboard Value LP
Cyxtera Technologies, Inc. (“Cyxtera” or the “Company”), a
global leader in mission-critical retail colocation and
interconnection services, and Starboard Value Acquisition Corp.
(“SVAC”) (NASDAQ: SVAC), a publicly traded special purpose
acquisition company, announced the signing of a definitive business
combination agreement today.
Formed through the 2017 carve-out of CenturyLink’s (now Lumen)
data center and colocation business, Cyxtera has grown to become
the largest privately held data center provider of retail
colocation services globally. Today, the Company’s footprint of 61
data centers in 29 markets around the world serves more than 2,300
leading enterprises, service providers and government agencies,
including Capgemini, Cognizant, Cloudflare, Fujitsu, HPE, Nvidia,
and Zenlayer. 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, with a plan to drive significant
revenue and EBITDA growth in the future.
Cyxtera provides an innovative suite of deeply connected and
intelligently automated infrastructure and interconnection
solutions to enterprise customers and leading service providers
around the world – enabling them to scale faster, meet rising
consumer expectations, and gain a competitive edge. As an industry
leader with a presence in each of the world’s top 101 most
important data center markets, Cyxtera delivers world-class
performance, security, and reliability to its customer base, while
also providing flexible solutions that meet their evolving IT
infrastructure needs in hybrid IT environments. The Company’s
API-driven, carrier-neutral platform is ideally suited to deliver a
future-ready, extensible, scalable, and interconnected data center
experience.
SVAC is sponsored by an affiliate of Starboard Value LP
(“Starboard”). Starboard has an 18-year history of public market
investing, with demonstrated expertise in driving value creation
through improved governance, execution, capital allocation, and
strategic re-positioning. Starboard has significant experience in
the technology sector, including in the digital infrastructure
industry. Starboard’s partners have directly served on the boards
of more than 30 public portfolio companies, overseeing numerous
business transformations and partnering with management teams to
drive substantial value creation. In addition to its expertise in
public company governance and driving long-term value creation,
Starboard’s ability to leverage its broad networks, relationships,
and perspectives on behalf of the Company makes SVAC an ideal
partner for Cyxtera as the Company embarks upon the next phase of
its journey.
“In 2017 we identified a huge opportunity – a premium portfolio
of high-quality data center 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.”
“At Cyxtera we’ve built a data center 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
utilization 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 center 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.”
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.”
“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.”
The Company’s leadership, including Executive Chair Manuel D.
Medina, CEO Nelson Fonseca, COO Randy Rowland, and CFO Carlos
Sagasta, will continue to lead Cyxtera, with Mr. Medina and Mr.
Fonseca also serving on the board of the combined company as Chair
and Director, respectively. SVAC Chair Jeff Smith and Industry
Advisor Greg Waters will join the combined company’s board as
Independent and Lead Independent Directors, respectively, 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.
Transaction Overview
The merger implies an enterprise value of approximately $3.4
billion. Upon completion of the transaction, including the PIPE
described below, 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.”
The company will receive $654 million of proceeds from a $250
million concurrent private placement of common stock of SVAC
(PIPE), priced at $10.00 per share, along with $404 million of cash
held in trust, assuming no public shareholders of SVAC exercise
their redemption rights. Certain clients of Starboard have entered
into a $100 million forward purchase agreement to offset
redemptions, if any. The PIPE includes commitments from
institutional investors, including Fidelity Management &
Research Company LLC, and clients of Starboard. Proceeds of the
transaction will be used to partially retire Company debt and
provide incremental cash for growth, as well as to pay transaction
expenses.
The proposed business combination has been unanimously approved
by the boards of directors of both SVAC and Cyxtera. It is expected
to close in mid-2021, subject to customary closing conditions,
including the receipt of regulatory approvals, and approval by
SVAC’s stockholders. Upon closing of the proposed business
combination, the name of Starboard Value Acquisition Corp. will be
changed to Cyxtera Technologies, Inc.
Additional information about the proposed transaction, including
a copy of the business combination agreement and investor
presentation, will be provided in a Current Report on Form 8-K that
will contain an investor presentation to be filed by SVAC with the
Securities and Exchange Commission and available at
www.sec.gov.
Advisors
Citi served as lead financial advisor to Cyxtera. Morgan Stanley
& Co. LLC served as financial advisor to Cyxtera, and J.P.
Morgan served as financial advisor to Cyxtera and BC Partners.
Latham & Watkins LLP served as legal advisor to Cyxtera and BC
Partners.
UBS Investment Bank, Stifel, Nicolaus & Company, and Cowen
and Company, LLC served as capital markets advisors to Starboard
Value Acquisition Corp. Akin Gump Strauss Hauer & Feld LLP
served as legal advisor to Starboard Value Acquisition Corp. Hughes
Hubbard & Reed LLP served as legal advisor to SVAC Sponsor
LLC.
J.P. Morgan Securities LLC served as lead placement agent with
Citi, RBC Capital Markets, LLC and UBS Investment Bank as
co-placement agents on the PIPE.
Investor Conference Call Information
Cyxtera and SVAC will host an investor call and presentation to
discuss the transaction at 8:30 AM ET today, Monday, February 22,
2021.
A live, listen-only webcast of the call will be available at the
following link:
https://services.choruscall.com/links/cyx210222.html. Investors
interested in accessing the conference call can dial
+1-866-777-2509 (United States toll-free) or +1-412-317-5413
(International).
Participants are encouraged to pre-register for the conference
call using the following link:
https://dpregister.com/sreg/10152646/e338f1c1e8. Callers who
pre-register will be given a conference passcode and unique PIN to
gain immediate access to the call and bypass the live operator.
Participants may pre-register at any time, including up to and
after the call start time.
A replay of the webcast will be available until May 22, 2021, on
Cyxtera’s investor relations page at
https://www.cyxtera.com/about-us/investor-relations.
About Cyxtera
Cyxtera is a global data center leader in retail colocation and
interconnection services. The company operates a footprint of 61
data centers in 29 markets around the world, providing services to
more than 2,300 leading enterprises, service providers, and U.S.
federal government agencies. Cyxtera brings proven operational
excellence, global scale, flexibility, and customer-focused
innovation together to provide a comprehensive portfolio of data
center and interconnection solutions. For more information, please
visit www.cyxtera.com.
About Starboard Value Acquisition Corp.
Starboard Value Acquisition Corp. is a blank check company whose
business purpose is to effect a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar
business combination with one or more businesses. The Company’s
sponsor, SVAC Sponsor LLC, is an affiliate of Starboard Value LP.
For more information, please go to StarboardSVAC.com.
About BC Partners
BC Partners is a leading international investment firm with over
$40 billion of assets under management in private equity, private
credit, and real estate. Established in 1986, BC Partners has
played an active role in developing the European buy-out market for
three decades. Today, BC Partners executives operate across markets
as an integrated team through the firm’s offices in Europe and
North America.
Since inception, BC Partners Private Equity has completed 119
private equity investments in companies with a total enterprise
value of over $180 billion and is currently investing its 11th
private equity fund. For more information, please visit
www.bcpartners.com.
About Medina Capital
Medina Capital is a private equity firm investing growth capital
in innovative companies in the cybersecurity, data analytics, cloud
infrastructure, and software-as-a-service markets. Medina Capital’s
philosophy emphasizes finding high-growth companies with
established products that will benefit from the strategic guidance
of the firm’s experience and expertise in the technology sector.
For more information, please visit www.medinacapital.com.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the federal securities laws, opinions and
projections prepared by the Company’s and SVAC’s management. These
forward-looking statements generally are identified by the words
“expects,” “will,” “projected,” “continue,” “ increase,” and/or
similar expressions that concern the Company’s or SVAC’s strategy,
plans or intentions, but the absence of these words does not mean
that a statement is not forward-looking. Such statements are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 and are based on management’s belief
or interpretation of information currently available. Because
forward-looking statements are predictions, projections and other
statements about future events that are based on current
expectations and assumptions, they are subject to inherent
uncertainties, risks and changes in circumstances that are
difficult to predict and many of which are outside of the Company’s
or SVAC’s control. Actual results and condition (financial or
otherwise) may differ materially from those indicated in the
forward-looking statements. These forward-looking statements are
subject to a number of risks and uncertainties that could cause
actual results and conditions to differ materially from those
indicated in the forward-looking statements, including, but not
limited to, changes in domestic and foreign business, market,
financial, political and legal conditions; the inability of the
parties to successfully or timely consummate the proposed
transactions, including the risk that any required regulatory
approvals are not obtained, are delayed or are subject to
unanticipated conditions that could adversely affect the combined
company or the expected benefits of the proposed transactions or
that the required stockholder approval is not obtained; failure to
realize the anticipated benefits of the proposed transactions; the
risk that the market price of the combined company’s securities may
decline following the consummation of the proposed transactions if
the proposed transaction’s benefits do not meet the expectations of
investors or securities analysts; risks relating to the uncertainty
of the Company’s projected operating and financial information; the
impact of the Company’s substantial debt on its future cash flows
and its ability to raise additional capital in the future; adverse
global economic conditions and credit market uncertainty; the
regulatory, currency, legal, tax and other risks related to the
Company’s international operations; the United Kingdom’s withdrawal
from the European Union and the potential negative effect on global
economic conditions, financial markets and the Company’s business;
the effects of the COVID-19 pandemic on the Company’s business or
future results; the ability to access external sources of capital
on favorable terms or at all, which could limit the Company’s
ability to execute its business and growth strategies; fluctuations
in foreign currency exchange rates in the markets in which the
Company operates internationally; physical and electronic security
breaches and cyber-attacks which could disrupt the Company’s
operations; the Company’s dependence upon the demand for data
centers; the Company’s products and services having a long sales
cycle that may harm its revenues and operating results; any failure
of the Company’s physical infrastructure or negative impact on its
ability to provide its services, or damage to customer
infrastructure within its data centers, which could lead to
significant costs and disruptions that could reduce the Company’s
revenue and harm its business reputation and financial results;
inadequate or inaccurate external and internal information,
including budget and planning data, which could lead to inaccurate
financial forecasts and inappropriate financial decisions;
maintaining sufficient insurance coverage; environmental
regulations and related new or unexpected costs; climate change and
responses to it; prolonged power outages, shortages or capacity
constraints; the combined company’s inability to recruit or retain
key executives and qualified personnel; the ability to compete
successfully against current and future competitors; the Company’s
fluctuating operating results; incurring substantial losses, as the
Company has previously; the Company’s ability to renew its
long-term data center leases on acceptable terms, or at all; the
Company’s government contracts, which are subject to early
termination, audits, investigations, sanctions and penalties;
failure to attract, grow and retain a diverse and balanced customer
base, including key magnet customers; future consolidation and
competition in the Company’s customers’ industries, which could
reduce the number of the Company’s existing and potential customers
and make it dependent on a more limited number of customers; the
Company’s reliance on third parties to provide internet
connectivity to its data centers; disruption or termination of
connectivity; government regulation; the non-realization of the
financial or strategic goals related to acquisitions that were
contemplated at the time of any transaction; the Company’s ability
to protect its intellectual property rights; the Company’s ability
to continue to develop, acquire, market and provide new offerings
or enhancements to existing offerings that meet customer
requirements and differentiate it from its competitors; disruptions
associated with events beyond its control, such as war, acts of
terror, political unrest, public health concerns, labor disputes or
natural disasters; sales or issuances of shares of the combined
company’s common stock may adversely affect the market price of the
combined company’s common stock; the requirements of being a public
company, including maintaining adequate internal control over
financial and management systems; risks related to corporate social
responsibility; the Company’s ability to lease available space to
existing or new customers, which could be constrained by its
ability to provide sufficient electrical power; the Company’s
ability to adapt to changing technologies and customer
requirements; the Company’s ability to manage its growth; risks
related to litigation, securities class action or threatened
litigation which may divert management time and attention, require
the Company to pay damages and expenses or restrict the operation
of its business; the volatility of the market price of the combined
company’s stock; the incurrence of goodwill and other intangible
asset impairment charges, or impairment charges to the Company’s
property, plant and equipment, which could result in a significant
reduction to its earnings;
U.S. and foreign tax legislation and future changes to
applicable U.S. or foreign tax laws and regulations and/or their
interpretation may have an adverse effect on the Company’s
business, financial condition and results of operations and tax
rules and regulations are subject to interpretation and require
judgment by the Company that may be successfully challenged by the
applicable taxation authorities upon audit, which could result in
additional tax liabilities; and the Company’s ability to use its
United States federal and state net operating losses to offset
future United States federal and applicable state taxable income
may be subject to certain limitations which could accelerate or
permanently increase taxes owed. The foregoing list of factors is
not exhaustive. You should carefully consider the foregoing factors
and the other risks and uncertainties described in the “Risk
Factors” section of SVAC’s final prospectus related to its initial
public offering, the proxy statement discussed below and other
documents filed by SVAC from time to time with the SEC. There may
be additional risks that the Company and SVAC do not presently know
or that they currently believe are immaterial that could also cause
actual results to differ from those contained in the
forward-looking statements. In addition, forward-looking statements
reflect the Company’s and SVAC’s expectations, plans or forecasts
of future events and views as of the date of this press release.
Accordingly, you should not place undue reliance upon any such
forward-looking statements in this press release. Neither the
Company, SVAC nor any of their affiliates have any obligation to
update this press release.
Additional Information and Where to Find It
In connection with the merger, SVAC is expected to file a proxy
statement (the “Proxy Statement”) with the SEC, which will be
distributed to holders of SVAC’s common stock in connection with
SVAC’s solicitation of proxies for the vote by the SVAC
stockholders with respect to the merger and other matters as
described in the Proxy Statement. SVAC urges its stockholders and
other interested persons to read, when available, the Proxy
Statement and amendments thereto and documents incorporated by
reference therein, as well as other documents filed with the SEC in
connection with the merger, as these materials will contain
important information about SVAC, Cyxtera and the merger. When
available, the definitive Proxy Statement will be mailed to SVAC’s
stockholders. Stockholders will also be able to obtain copies of
such documents, without charge, once available, at the SEC’s
website at www.sec.gov, or by directing a request to: Starboard
Value Acquisition Corp., 777 Third Avenue, 18th Floor, New York, NY
10017.
Participants in Solicitation
SVAC and its directors and executive officers, under SEC rules,
may be deemed to be participants in the solicitation of proxies of
SVAC’s stockholders in connection with the merger. Stockholders of
SVAC may obtain more detailed information regarding the names,
affiliations and interests of SVAC’s directors and executive
officers in SVAC’s final prospectus for its initial public offering
filed with the SEC on September 11, 2020 and in the Proxy Statement
relating to the merger when available. Information concerning the
interests of SVAC’s participants in the solicitation, which may, in
some cases, be different than those of SVAC’s stockholders
generally, will be set forth in the Proxy Statement relating to the
merger when it becomes available.
No Offer or Solicitation
This press release is not a proxy statement or solicitation of a
proxy, consent or authorization with respect to any securities or
in respect of the proposed transaction and shall not constitute an
offer to sell or a solicitation of an offer to buy the securities
of SVAC or the Company nor shall there be any sale of any such
securities in any state or jurisdiction in which such offer,
solicitation, or sale would be unlawful prior to registration or
qualification under the securities laws of such state or
jurisdiction.
1Source: “Niche No More? Cushman & Wakefield Ranks 38 Global
Data Center Markets,” Cushman & Wakefield.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210222005413/en/
Cyxtera Xavier Gonzalez Xavier.gonzalez@cyxtera.com
Starboard Value Acquisition Corp. Dan Gagnier / Jeffrey
Mathews Gagnier Communications 646-569-5897 SVAC@gagnierfc.com
BC Partners Andrew Merrill / Katherine Segura Prosek
Partners pro-bcpartners@prosek.com
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