Shares of data center developer CyrusOne jumped 8 percent Friday following media reports that the company has received takeover interest. Bloomberg reported Friday that a bidder group including KKR & Co., Stonepeak Infrastructure Partners and I Squared Capital is in the preliminary stages of weighing a bid for the company, citing unnamed sources “familiar with the matter.”
CyrusOne stock rose 8 percent to just over $70 a share following the reports. The Bloomberg story (which is also available at the Dallas News) said the investor group’s interest has prompted CyrusOne to begin “working with an adviser to evaluate strategic options.”
The Bloomberg report emphasized that “no decision has been made and CyrusOne could opt to remain independent.”
CyrusOne has been on the forefront of a trend in which the world’s largest hyperscale Internet companies have begun leasing cloud capacity from data center developers, rather than building their own server farms. These huge deals help hyperscalers keep pace with the rapid growth of their cloud operations, which has tested the limits of their in-house construction units. CyrusOne has been a pioneer in optimizing its designs and supply chains to deliver lots of space, as quickly as possible.
The company was founded in 2000 by Houston entrepreneur David Ferdman, and quickly found its niche specializing in high-density colocation services for energy companies in Houston and Dallas. The company expanded across Texas after it was acquired in 2007 by private equity firm ABRY Partners. In 2010, Cincinnati Bell paid $525 million to buy CyrusOne, which was then spun off in an IPO in January 2013. Since then, the company’s value has grown to an estimated $7.7 billion at today’s share price.
Stonepeak is a familiar name to data center watchers through its acquisition of Cologix, which specializes in colocation and interconnection in regional markets. It is among a new class of investors in the data center sector, including infrastructure funds and sovereign wealth funds with deep pockets and extended time horizons. Their activity has been scaling up over several years, and some of these investors are raising billions of dollars to invest in digital infrastructure, citing extraordinary demand for capital to fuel the data economy.
For more background on CyrusOne, see these stories at Data Center Frontier: