Switch Acquires Data Foundry for $420 Million, Enters Texas Market

Switch is acquiring data center provider Data Foundry for $420 million, expanding into the Texas market. The deal provides Switch with its fifth “prime” data center region, which will include Data Foundry facilities in Austin and Houston. Switch says it intends to add additional capacity in both cities.

This is the first major acquisition for Switch, which builds large data centers and serves a roster of marquee clients in the cloud and enterprise sectors. The company a massive data center cluster in its home base of Las Vegas, and has since expanded into Reno, Atlanta, and Grand Rapids, Michigan.

The Data Foundry deal provides an instant entry to the strategically important Texas market, including three data centers in Austin, which is seeing an influx of technology firms relocating from the West Coast. The acquisition also adds more than 400 customers. Switch will now have 16 data centers across six locations.

“The Data Foundry acquisition extends Switch’s national reach and enhances our ability to serve Texas and the Central U.S. region with low latency connectivity, while also providing critical geographic and revenue diversification with robust expansion potential to accelerate long-term growth and value creation,” said Switch Founder and CEO Rob Roy.

Data Foundry is a colocation and managed services provider that began operations in 1994 as Texas.net, and recently opened a major campus in Austin. The company’s portfolio includes three includes three data centers in Austin with expansion capabilities up to 44 MW at full buildout. The Houston Data Foundry campus has one data center with up to 18 megawatts of capacity. Switch intends to commence development on new data centers in both Austin and Houston at the end of 2021, with the first sectors available for customer deployments in 2023.

“Data Foundry is proud to partner with Rob Roy and the Switch team in this transaction that we believe will carry forward our company’s rich history of innovation in Texas, and will result in tremendous long-term benefits to our customers and all stakeholders of the combined business,” said Carolyn and Ron Yokubaitis, Co-Founders of Data Foundry.

“Both companies share a set of core values that emphasize technology leadership, operational excellence, community involvement, and a relentless focus on customer service that will enable a seamless transition of leadership and continued success for years to come,” added Jonah Yokubaitis, also a Co-Founder of Data Foundry.

The all-cash acquisition priced of $420 million represents approximately 19x estimated 2021 Adjusted EBITDA got Data Foundry, and will be funded with a combination of cash on hand, borrowings under Switch’s fully undrawn $500 million revolving credit facility, or new debt. Switch expects to realize $2 million of “cost synergies” through integrating the two companies.