Blackstone to Acquire QTS in Blockbuster Data Center M&A Deal

After years of consolidation and mergers, there are still big deals to be done in the data center industry.

Global investment firm Blackstone will acquire QTS Realty Trust for $78 a share, valuing QTS at approximately $10 billion, the two companies said today. The all-cash deal represents a 21 percent premium to Friday’s closing price for QTS shares. Interestingly, the deal includes a 40-day “go to shop” period in which QTS can field offers from other potential suitors.

QTS operates more than 7 million square feet of data centers in in 20 markets across North America and Europe, including large data center campuses in Northern Virginia, Chicago, Dallas, Atlanta and Portland. These large campuses position QTS for continued growth opportunities with hyperscale customers, who accounted for 50 percent of QTS leasing in the first quarter of 2021.

Blackstone is a significant player in the data center industry, but has done much of its investing through joint ventures with companies like COPT and stakes in global companies like Ascenty in Brazil.

“QTS aligns with one of Blackstone’s highest conviction themes – data proliferation – and the required investment makes it well suited as a long-term holding for our perpetual capital vehicles,” said Greg Blank, Senior Managing Director, Blackstone Infrastructure Partners. “We are committed to a strong, lasting partnership, leveraging Blackstone’s scale, reach, resources and access to capital to drive long-term growth at QTS.”

QTS said that Blackstone can invest in its operating platform and “take QTS to the next level of growth.”

“We are confident this transaction is the right step to achieve our strategic objectives in our next phase of growth,” said Chad Williams, Chairman and CEO of QTS. ““We see a significant market opportunity for growth as hyperscale customers and enterprises continue to leverage our world-class infrastructure to support their digital transformation initiatives.”

The deal is expected to close later this year, and the companies “expect that QTS will continue to be led by its senior management team”  and keep its headquarters in Overland Park, Kansas.

Major M&A action was one of the trends DCF highlighted in our 2021 forecast (Eight Trends That Will Shape the Data Center in 2021), in which we predicted “a big year for data center mergers and acquisitions, including some larger transactions.”

More to come …