American Tower nears US$10b deal to buy CoreSite

[NEW YORK] American Tower Corp has agreed to buy CoreSite Realty Corp, valuing the data-centre real estate investment trust at an enterprise value of about US$10.1 billion, including debt.

The offer of US$170 a share is a 2 per cent premium to CoreSite's close on Friday, when it rose 2.3 per cent to US$166.59, giving the company a market value of about US$8.4 billion. American Tower has a market capitalisation of about US$124 billion.

"We are in the early stages of a cloud-based, connected and globally distributed digital transformation that will evolve over the next decade and beyond," said Tom Bartlett, American Tower's chief executive officer, in a statement announcing the deal on Monday.

The acquisition comes amid steady consolidation among Reits that manage data centres, which provide critical infrastructure for companies big in cloud computing such as Amazon.com Inc, Salesforce.com Inc and Alphabet Inc.

Some data centre Reits been pairing up to add scale - and pricing power - to better serve their largest and most critical tenants. They also see more growth on the horizon as demand for data infrastructure keeps rising.

Real-estate investing giant Blackstone Inc agreed to take data-centre operator QTS Realty Trust Inc private in a US$6.7 billion deal in June, in part to gain exposure to a hot sector.

CoreSite operates 24 data centres in major urban hubs including Boston, Chicago, New York, Miami and Los Angeles, says its website. Unlike most Reits that earn almost all of their income from leasing, CoreSite also makes money from power and interconnection services it supplies to tenants.

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