Global Data Center Provider Cyxtera To Go Public With Starboard Value SPAC

Investors will have another option for data center providers with the third-largest company in the sector hitting the public market via a SPAC deal.

The SPAC Deal: Cyxtera is going public in a SPAC dal with Starboard Value Acquisition Corp SVAC. The deal values the company at $3.4 billion and will give Cyxtera $654 million in gross proceeds.

Shares will trade under "CYXT" on the Nasdaq with the deal expected to close in mid-2021. Current Starboard Value Acquisition shareholders will own 11% of the new company.

About Cyxtera: Formed in 2017 by the carve-out of the data center business from Lumen Technologies LUMN, Cyxtera is a pure-play on the data storage industry.

The company has 61 data centers in 29 markets around the world. Cyxtera serves 2,300 enterprises, service providers and government customers.

Customers of Cyxtera include CloudFlare, Fujitsu, Hewlett Packard Enterprises and Nvidia. Cyxtera operates in North America, Europe and Asia and has data centers in seven countries.

Lumen is an investor in the company and the largest customer making up 13% of company revenue.

Related Link: 10 SPACs Trading Under $11 For Investors To Consider In 2021

Growth Ahead: The data center industry is seeing growth from several secular tailwinds. Cyxtera provides both physical and virtual connectivity for its partners. The goal is yields of 20% from three- to five-year contracts with customers.

Cyxtera has listed its growth plan to include geographic expansion, mergers and acquisitions, cross selling products and expanding the company’s existing footprint.

Financials: Cyxtera had revenue of $690 million and adjusted EBITDA of $213 million in fiscal 2020.

Cyxtera is guiding for fiscal 2022 revenue to hit $719 million. Revenue is expected to grow around 7% annually from fiscal 2021 to fiscal 2025.

SVAC Price Action: Shares of Starboard Value Acquisition are up 4% to $11.61.