China Merchants bids US$3.4 billion for Chindata to challenge Bain

AN arm of state-owned conglomerate China Merchants Group has made a US$3.4 billion takeover bid for Chindata Group Holdings, setting up a bidding war for the Asian data centre operator.

China Merchants Capital Holdings (International) made a non-binding offer of US$9.20 in cash per American depositary share (ADS), according to a statement on Monday (Jul 10). The bid compares to a rival offer of US$8 per ADS from Bain Capital.

Beijing-based Chindata jumped as much as 6.2 per cent in pre-market US trading on Monday. The company said last month a special board committee had hired Citigroup as an adviser after it received a going-private proposal from Bain Capital, which already has a major stake in the company. Some analysts said at the time that a privatization makes sense but Bain’s offer was likely too low.

Bloomberg News reported late last year that China Merchants was exploring a potential bid for Chindata.

China Merchants said it views Chindata’s employees as instrumental to its success and plans to retain key staff to the extent possible. It plans to work closely with Chindata management to accelerate the next stage of its growth strategy and further unlock its capabilities as Asia’s leading data centre platform, according to Monday’s statement.

Data centres have become hot assets among investors, in part due to the perception of their having stable returns, and expectations of ongoing growth as people increasingly rely on technology.

Chindata operates carrier-neutral data centres in locations including China, India and Malaysia, according to its website. Bain bought Chindata in 2019 from Wangsu Science & Technology and merged it with its portfolio firm Bridge Data Centers. In 2020, Chindata raised US$621 million through its US initial public offering. BLOOMBERG