Digital Realty acquires Teraco in $3.5bn deal

BY Fraser Tennant

In a strategic transaction that accelerates its pan-African expansion, global data centre solutions provider Digital Realty is to acquire data centre operator Teraco in a deal valued at $3.5bn.

The acquisition of Teraco, the largest and most densely interconnected data centre platform in Africa, immediately establishes Digital Realty as the leading colocation and interconnection provider on the high-growth African continent.

Moreover, after closing, Digital Realty will own approximately 55 percent of the total equity interests in Teraco, with the remaining 45 percent held by a consortium of existing investors, including management, Berkshire Partners LLC, Permira, van Rooyen Group, Columbia Capital, Stepstone Ventures and the Teraco Connect Trust. 

“Teraco is the industry leader in South Africa and the continent's connectivity hub,” said A. William Stein, chief executive of Digital Realty. “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.” 

The transaction will also advance Digital Realty’s strategy of increasing exposure to highly connected, network- and carrier-dense facilities to enhance its global coverage and connectivity capabilities. 

"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,” said Jan Hnizdo, chief executive of Teraco. “Our combined platform will be uniquely positioned to serve the full customer spectrum with the ability to support their growth around the world.”

The Teraco management team is expected to remain in place and will maintain day-to-day responsibility for operations in South Africa. In addition, Teraco's existing investors are rolling forward a significant portion of their equity interests, demonstrating their conviction in Teraco's future growth prospects under the Digital Realty umbrella.

The transaction is expected to close in the first half of 2022 and is subject to customary closing conditions. 

Mr Stein concluded: “This highly strategic transaction immediately cements Digital Realty as the leading colocation and interconnection provider in Africa, a region experiencing rapid digital transformation.”

News: Digital Realty data centre to buy majority stake in Africa's Teraco

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