Here’s why Blackstone Group is paying $6.7B to acquire data-center company QTS Realty Trust

By:
on Jun 7, 2021
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  • Blackstone has agreed to buy QTS Realty Trust for $78.00 per share in an all-cash transaction.
  • The purchase price represents a premium of 21% to QTS’ closing share price as of June 4, 2021.
  • QTS is a real-estate investment trust that owns more than 7 million square feet of data-center space.

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Blackstone Group Inc. (NYSE: BX) has agreed to buy QTS Realty Trust Inc. (NYSE: QTS) in  deal valued at $6.7 billion, according to The Wall Street Journal (WSJ).

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Shares of QTS surged higher in morning trading, increasing by more than 20% over the closing price on Friday. The stock was up 4.2% year-to-date through Friday.

Shares of Blackstone are up 0.8% today and up almost 50% year-to-date.

Why buy QTS Realty Trust?

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QTS is a real-estate investment trust that owns more than 7 million square feet of data-center space in 28 locations across North America and Europe. It provides data center solutions to the leading technology companies and government entities.

With the deal for QTS, Blackstone gains exposure to the fast growing field of data.

Digital transformation and cloud adoption are secular trends that are expected to continue the strong growth of QTS. The pandemic has accelerated the shift towards a digital world and Blackstone is positioning itself for the future with this acquisition.

The deal fits into the private equity giant’s thematic approach to investing.

What the management said

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According to the press release on the deal, 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.”

Greg Blank, Senior Managing Director, Blackstone Infrastructure Partners, said:

“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 centers. 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.”

Other details of the deal

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Blackstone Infrastructure Partners and BREIT, the private equity firm’s nontraded real estate investment trust, have agreed to pay $78 a share for QTS. The price represents a 21% premium over the closing price on Friday. 

Including the debt on QTS’s balance sheet, the deal is valued at around $10 billion.

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