Data centre operator Teraco announced that Digital Realty has entered into a definitive agreement to acquire a majority stake in Teraco from a consortium of investors, including Berkshire Partners and Permira. The South African-based firm, established in 2008, offers vendor-neutral colocation and other related services in data centres. The deal values all of Teraco at USD 3.5 billion.
The takeover will provide Teraco continued access to capital to grow, along with access to skills and knowledge from the Digital Realty global platform. The Teraco and NAPAfrica brands will continue after the acquisition, and its own management team will remain in place and maintain day-to-day responsibility for operations in South Africa. The Teraco management team is led by CEO Jan Hnizdo and supported by a team with over 100 years of combined experience.
In addition, Teraco’s existing investors are rolling forward a significant portion of their equity interests. After closing, Digital Realty will own approximately 55 percent of the total equity interests in Teraco, while the remaining 45 percent will be held by a consortium of existing shareholders, including management, Berkshire Partners, Permira, van Rooyen Group, Columbia Capital, Stepstone Ventures and the Teraco Connect Trust. They will have a right to sell to Digital Realty within 3.5-5.5 years.
The takeover expands on Digital Realty's growing presence in Africa, which also includes hubs in Kenya and Nigeria. Teraco operates seven data centre in the key South African metros of Johannesburg, Cape Town and Durban, with links to seven major international subsea cables, more than 275 connectivity providers and over 25 cloud and content platforms. Total power in service reaches 75MW, with another 19MW under construction and planned capacity of 187MW.
The takeover price is based on a 3.5 percent cap on projected cash net operating profit of USD 121 million this year. Digital Realty expects the deal to dilute core FFO by 1 percent in 2022, have a neutral effect in 2023 and be positive from 2024.
The transaction is expected to close in the first half of 2022, subject to customary closing conditions.
