Vertiv Holdings Co. has begun trading on the New York Stock Exchange Monday after completing a $5.3 billion merger with GS Acquisition Holdings, a public company led by investor David Cote.
The completion of the transaction positions Vertiv as an investment vehicle squarely focused on the growth of data centers – a rare “pure play” in the industrial equipment sector. That’s significant at a time when the world’s largest investors are targeting digital infrastructure, citing extraordinary demand for capital to fuel the shift to a data economy.
“As we’ve met with potential investors over the past few months and shared our story, it’s clear there is an appetite in the market for a company like Vertiv that demonstrates superb leadership and growth capabilities on a global scale,” said Cote, Executive Chairman of Vertiv’s Board of Directors. “I’m very pleased to be a part of the company and look forward to a bright future together.”
The GSAH acquisition of Vertiv was announced in December, and approved by shareholders last Thursday. Shares of the renamed VRT closed Monday at $13.12, about 2 percent higher than Friday’s close for shares of GSAH.
“Today marks an important milestone in Vertiv’s history, as we enter the public markets well positioned to create shareholder value and capture the growth opportunities we see on the horizon,” said Vertiv CEO Rob Johnson. “This is possible thanks to the hard work of everyone at Vertiv, the fantastic customers we have the good fortune to work with, the partnership of Dave Cote and Goldman Sachs, and Platinum Equity’s support over the past few years.
“Together we have positioned Vertiv for its next chapter, and I couldn’t ask for a better team to be with on this journey,” said Johnson.
The Vertiv brand is only four years old, but has a long history with the data center industry’s most familiar names, especially the Liebert line of power and cooling products. Vertiv had nearly $4.3 billion revenue in 2018, with competitive products across the spectrum of data center equipment.
Cote, who engineered a major turnaround as CEO of Honeywell, loves the growth opportunity in the data center industry. Vertiv has a long history as a consolidator in the data center power and software sectors. Another M&A focus could be edge computing, which both Cote and Johnson see as a growth opportunity.
The Vertiv Journey
Headquartered in Columbus, Ohio, Vertiv employs around 20,000 people and does business in more than 130 countries. It traces its roots to the 1965 founding of Liebert, a maker of computer room air conditioner (CRAC) units, which supply perimeter cooling for raised-floor data centers. Liebert was acquired in 1987 by Emerson Electric, which later formed Emerson Network Power (ENP) focus on the data center sector.
In 2015 Emerson announced plans to spin off Emerson Network Power, which was acquired by private equity firm Platinum Equity Group in a $4 billion transaction, and rebranded as Vertiv.
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On the acquisition front, Vertiv assesses the data center equipment sector as a “fragmented industry with opportunities for bolt-on M&A.” that includes companies and technologies that can extend its current products, as well as technologies like energy storage that could transform the way data centers provision power.
Vertiv is also focused on the edge computing opportunity, and retooling for a more agile data center landscape. It’s an effort that has involved extensive study of the emerging market, and how customers will use edge services. The resulting “archetypes” are guiding Vertiv’s edge strategy. Given the nascent state of the edge market, it’s likely that M&A opportunities will emerge over the next several years.
With the closing of the transaction, Platinum Equity holds approximately 38% of the outstanding common stock of Vertiv Holdings Co, the former GS Acquisition Holdings Corp stockholders hold approximately 25% of the outstanding shares, and investors in the private placement hold the remaining 37%.