Mergers and Acquisitions, Enterprise, Mergers and Acquisitions, Content

Digital Realty Acquires Teraco Colocation Data Centers: $3.5B Valuation

Digital Realty is acquiring a majority of Teraco in a deal that values the colocation, data center and network connection provider at $3.5 billion.

This is technology M&A deal number one that ChannelE2E has covered in 2022. See more than 1,000 technology M&A deals & MSP acquisitions for 2022, 2021 and 2020 listed here.

The Teraco deal is expected to close in the first half of 2022. After closing, Digital Realty will own approximately 55% of Teraco. The remain 45% will be owned by such existing investors as Berkshire Partners and Permira, van Rooyen Group, Columbia Capital Stepstone Ventures and the Teraco Connect Trust. Looking ahead, Digital Realty will have the opportunity to gradually acquire a larger slice of Teraco, the announcement indicated.

Teraco, based in Africa, serves more than 600 customers, including more than 275 connectivity providers, over 25 cloud and content platforms and approximately 300 enterprises, the buyer indicated. The deal provides synergies with Digital Realty's connectivity hubs in Nigeria on the west and Kenya on the east coast – along with Digital Realty's Mediterranean interconnection hubs in Marseille and Athens, the buyer added.  The Teraco management team including CEO Jan Hnizdo will remain in place.

Digital Realty Acquires Teraco: Executive Perspectives

In a prepared statement about the deal, Digital Realty CEO A. William Stein said:

"This highly strategic transaction immediately cements Digital Realty as the leading colocation and interconnection provider in Africa, a region experiencing rapid digital transformation. Teraco is the industry leader in South Africa and the continent's connectivity hub.  This investment will enhance our ability to serve customers on a global basis by adding significant regional scale with a premier, network-dense portfolio in South Africa's most strategically important metros.  Teraco will also advance our strategy of increasing exposure to highly connected, network- and carrier-dense facilities to enhance our global coverage and connectivity capabilities."

Added Teraco CEO Jan Hnizdo:

"We are excited to enter our next chapter by joining forces with Digital Realty to create a truly global, scaled platform serving our customers in Africa and beyond.  Our combined platform will be uniquely positioned to serve the full customer spectrum with the ability to support their growth around the world.  We look forward to working with the Digital Realty team to extend our state-of-the-art data center and connectivity solutions to capitalize on the favorable industry trends and tremendous market opportunity."

Noted Drew Walker, a principal at Berkshire Partners:

"It has been a privilege to partner with Jan and his team at Teraco. Teraco has delivered exceptional growth during these first few years of our investment, leveraging its interconnected ecosystems, ongoing investments in expansion capacity, and track record of stellar execution to strengthen its leadership position in the fast-growing Sub-Saharan African data center market. As investors in digital infrastructure businesses for nearly a quarter of a century, we’re thrilled to continue our partnership with Teraco alongside Digital Realty, who will bring significant expertise and resources to the Teraco platform.”

Stated Pierre Pozzo, a principal at Permira:

“Over the last seven years, Teraco has transformed itself into one of the most unique data center platforms globally. Today, Teraco combines the very rare characteristics of offering an interconnection-rich ecosystem, being Africa’s home to the Cloud, while also owning the African Internet Exchange, Napafrica. Jan and his team should be very proud of what they have achieved. It has been a pleasure to support the Company since our original investment in 2015, during which time earnings have multiplied by nearly 20x organically. We look forward to partnering with Digital Realty to further accelerate Sub-Saharan Africa’s digital transformation powered by Teraco.”

Concluded Grant van Rooyen, president of van Rooyen Group:

“It has been a pleasure partnering with Berkshire, Permira, and the Teraco management team, and I look forward to continuing our relationship. As a South African, it has been satisfying to invest in the region’s digital infrastructure capabilities, and I remain enthusiastic about the opportunities for both Teraco and Sub-Saharan Africa as the Company continues to effectively serve its domestic and international customers.”

Digital Realty Data Center Reach, Earlier Acquisitions

Digital Realty has acquisition experience. Earlier purchases include Ascentry for a Brazil push and DuPont Fabros Technology in the United States.

Digital Realty's global data center footprint spans more than 280 facilities in 48 metros across 24 countries on six continents, the company indicated.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.