(Bloomberg) --EQT AB has resumed seeking to acquire Global Switch Holdings Ltd. in a deal that could value the data center company at around $6.5 billion, people familiar with the matter said, months after earlier talks stalled over disagreements on valuation.
The private equity firm is in discussions with Global Switch's Chinese owners about a potential deal, said the people, who asked not to be identified as the information is private. An agreement could be reached in the coming months depending on the outcome of the due diligence, the people said.
The owners of Global Switch -- Chinese steelmaker Jiangsu Shagang Group Co. and Avic Trust Co. -- have been exploring options for the London-based data center operator since at least 2019. Global Switch was initially eyeing an initial public offering in Hong Kong. The UK company's shareholders started considering selling the business in 2021 at a time when other Chinese corporates were unwinding acquisitions of non-core assets they acquired in recent years.
EQT was among the buyout firms that were in the final round of bidding for Global Switch, Bloomberg News reported in late 2022. Other bidders included KKR & Co. and PAG and the owners were seeking a valuation of about $10 billion for the assets. The discussions with prospective suitors ground to a halt later amid tightening financing conditions and lower-than-expected bids, people familiar with the matter have said.
Global Switch's owners were considering selling the operations in Europe and Asia Pacific separately to different buyers, which could potentially boost the likelihood of getting a deal done, Bloomberg News reported in August. Each division could be valued at roughly $3 billion, the people said at the time.
Deliberations are ongoing and the companies could still decide against any transaction, according to the people. Representatives for EQT and Global Switch declined to comment, while representatives for Avic and Shagang didn't respond to requests for comment.
Shares of Shagang rose as much as 1.3% on Friday in Shenzhen.
Founded in 1998, Global Switch owns and operates 13 data centers across Europe and Asia Pacific comprising about 428,000 square meters, according to its website. Shagang in 2019 became the largest shareholder of Global Switch after buying another 24% stake in a ?1.8 billion ($2.2 billion) deal from British billionaire brothers David and Simon Reuben, who had begun to whittle down their ownership in 2016.
Data centers have become hot assets among investors, in part due to the perception of their stable returns and expectations of ongoing growth as people increasingly rely on technology.
EQT manages EUR232 billion ($247 billion) of assets globally under private equity and real asset segments, according to its website. In 2020, the firm acquired EdgeConneX Inc., which has a portfolio of more than 50 data centers across Europe, Asia and the Americas.
--With assistance from Elffie Chew.
(Adds Shagang's share move in seventh paragraph.)
(C)2023 Bloomberg L.P.
