Private equity firm Stonepeak announced on Monday that it will acquire a 29 percent interest in American Tower’s U.S. data center business CoreSite for $2.5 billion.
The long-term strategic partnership, which will be realized through an investment in common equity and mandatorily convertible preferred equity, implies an enterprise value of $10.5 billion for the business.
The platform’s data center portfolio consists of 27 data centers in 10 U.S. markets (none of which are in Texas), 450 networks, 23 native cloud on-ramps and 35,000 interconnections.
The transaction is expected to close in the third quarter.
Sidley Austin is serving as principal legal advisor to Stonepeak with a Houston team that includes partners Tim Chandler, Cliff Vrielink and Tommer Yoked, senior managing associate John Stribling and managing associate Chanse Barnes.
Sidley has counseled Stonepeak for many years on deals, including its sale of its thermal power generation projects in New England to Japan’s JERA Co. Inc. in May for undisclosed terms. That transaction was also led by Chandler.
Stonepeak’s general counsel is Adrienne Saunders in New York but its principal of legal is Claire (Smyser) Campbell in Houston, a former senior associate at Vinson & Elkins.
Cleary Gottlieb Steen & Hamilton was outside counsel to American Tower, including M&A partners Benet O’Reilly in the Bay Area and Kim Spoerri in New York, but the company was also advised by Sullivan & Worcester regarding REIT and tax matters (led by partner Brian Hammell in Boston).
J.P. Morgan is lead financial advisor to American Tower, which had assistance from CDX Advisors. MUFG Bank Ltd. is sole financial advisor to Stonepeak.
American Tower will keep managerial and operational control as well as day-to-day oversight of its U.S. data center business and Stonepeak will get certain governance rights.
Stonepeak said it’s making its investment as part of its core infrastructure strategy. Stonepeak’s affiliated investment vehicles received equity and debt commitment letters of $2.5 billion from equity and debt financing sources.
American Tower and Stonepeak said the transaction will position them to mutually benefit from the demand for low-latency, hybrid IT solutions and agile interconnection across the platform’s data center campuses.