Global Switch expects binding bids soon in $8 billion deal -sources

HONG KONG, Dec 7 (Reuters) - Binding offers for Global Switch are due by mid-December which could value the Chinese-controlled data centre provider at around $8 billion including debt, two people with direct knowledge of the deal told Reuters.

Private equity firms PAG, KKR & Co (KKR.N) and EQT (EQTAB.ST) are in the final round of bidding for British-based Global Switch, which counts Chinese steelmaker Jiangsu Shagang Group as a controlling shareholder, said one of the people and a third source with direct knowledge of the deal.

Global Switch had expected a sale to value it at around $10 billion, sources have said. But the bidders will likely fall short of that expectation, the three sources said.

At $8 billion the deal would still be one of Asia's largest ongoing transactions this year, although an agreement will likely be reached in 2023, said the sources, who declined to be identified as the information is confidential.

Global Switch, PAG and EQT declined to comment. Shagang and KKR did not immediately respond to requests for comment.

The company said in June its shareholders were exploring a potential divestment and that they had appointed JP Morgan, Morgan Stanley, UBS and CITIC Securities to advise on the sale.

The three international banks declined to comment. CITIC Securities did not immediately respond to a request for comment.

Data centres globally have become increasingly attractive to industry players as well as private equity investors, as the COVID-19 pandemic has led to more being done online.

Founded in 1998, Global Switch operates 13 data centres across Europe and Asia Pacific.

Jiangsu Shagang first invested indirectly in 2016, and became its largest shareholder in 2019 after acquiring a further 24% stake for 1.8 billion pounds, according to a Global Switch announcement at the time. That would translate into a valuation of 7.5 billion pound ($9.1 billion).

Global Switch's earnings before interest, tax, depreciation and amortization (EBITDA) reached $298 million in 2021 with $495 million in revenues, one of the sources said.

The company declined to comment on the numbers.

Reporting by Kane Wu in Hong Kong; additional reporting by Roxanne Liu in Beijing; editing by Alexander Smith

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