Keeping up with the industry’s heavy consolidation trend, QTS Realty Trust (NYSE: QTS) and Blackstone (NYSE: BX), have announced that they have entered into a definitive agreement under which Blackstone Infrastructure Partners, Blackstone Real Estate Income Trust, Inc. and other long-term perpetual capital vehicles managed by Blackstone will acquire all outstanding shares of common stock of QTS Realty Trust.
The transaction will see the funds offer $78.00 per share in an all-cash transaction valued at approximately US$10 billion, including the assumption of debt, of $6.7 billion without debt assumptions.
The purchase price represents a premium of 21% to QTS’ closing share price as of June 4, 2021 and a 24% premium to the volume weighted average share price over the last 90 days. The transaction was unanimously approved by the QTS Board of Directors and is expected to close in the second half of 2021.
The premium share price Blackstone’s funds have offered for QTS have sent the data centre operator’s stock soaring in premarket trading this Monday morning. Blackstone’s stock rose 1.0% ahead of the open.
Philip Trahanas, Lead Director of the QTS Board of Directors, said: “We are pleased to enter into this transaction with Blackstone, as it will deliver compelling, immediate and certain value to stockholders while positioning QTS to continue supporting customers’ expanding data centre infrastructure needs.
“The QTS Board regularly reviews the Company’s strategy and market opportunities to maximize stockholder value, and we are confident this transaction achieves that objective.”
Chad Williams, Chairman and CEO of QTS, said: “We see a significant market opportunity for growth as hyperscale customers and enterprises continue to leverage our world-class infrastructure to support their digital transformation initiatives. We are confident this transaction is the right step to achieve our strategic objectives in our next phase of growth. I want to thank each of our QTS employees for their continued dedication to a culture of service to others, which has positioned QTS to enter into this transformative transaction.”
“We are delighted to back QTS and its world-class management team as they continue to scale the company to meet the rising demand for data centres. QTS aligns with one of Blackstone’s highest conviction themes – data proliferation – and the required investment makes it well suited as a long-term holding for our perpetual capital vehicles. We are committed to a strong, lasting partnership, leveraging Blackstone’s scale, reach, resources and access to capital to drive long-term growth at QTS,” said Greg Blank, senior managing director, Blackstone Infrastructure Partners.
Also commenting, Tyler Henritze, Head of Acquisitions Americas for Blackstone Real Estate, added: “We are focused on investing in assets that are benefitting from strong, secular tailwinds, such as the rapid digitalization of data.
“QTS is a leading provider of data centre solutions with a portfolio of high-quality assets in desirable markets, positioning it well to capitalize on these powerful trends in the data centre space. We believe the vast expertise across our business will enable the QTS platform to succeed over the long-term.”
The transaction with Blackstone is expected to close in the second half of 2021, subject to approval by QTS’ stockholders and the satisfaction of other customary closing conditions.
Subject to and upon completion of the transaction, QTS’ common stock will no longer be listed on the New York Stock Exchange. QTS will be jointly owned by Blackstone Infrastructure Partners and Blackstone Real Estate Income Trust (BREIT).
Jefferies LLC and Morgan Stanley & Co. LLC are acting as financial advisors to QTS, and Hogan Lovells US LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP are acting as legal counsel to QTS. Citigroup Global Markets Inc., Barclays, Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC are acting as financial advisors to Blackstone, and Simpson Thacher & Bartlett LLP is acting as its legal counsel.