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A Major Data Center Player Is Going Public Through a SPAC

By Matthew Frankel, CFP® - Mar 6, 2021 at 6:22AM

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Data center investors are about to have a new alternative on the public markets.

The SPAC boom is showing no signs of slowing down, and we recently learned that Starboard Value Acquisition Corporation (SVAC) has identified its target. The blank check company plans to take data center operator Cyxtera public later this year. In this Fool Live video clip, recorded on Feb. 22, contributor Matt Frankel, CFP, and Industry Focus host Jason Moser discuss the deal and what investors should know about the business. 

Matt Frankel: So Neil says, "Matt, I think you own SVAC, which is Starboard Value Acquisition." The famous value investor Starboard Value, they had a SPAC and it announced a merger with a data center company today called Cyxtera.

Jason Moser: SPACs and data.

Frankel: They are a value seeking SPAC, which is why I bought so much of their shares without a deal, I just love their investment strategy. I'm a value guy.

Moser: I know.

Frankel: Cyxtera, if you're not familiar, they are the No. 3 data center company behind Equinix (EQIX 2.19%) and Digital Realty (DLR 0.89%). They are going public. Before, they were the largest private data center operator and now they are going to be the third-largest public one through the Starboard Value fund. The stock is actually moving down today a little bit. It makes sense. I mean, it's not one of those instant value deals like taking Lucid public or DraftKings (NASDAQ: DKNG) or one of the exciting growth stocks.

Moser: It's not sexy.

Frankel: Yeah, it's almost a REIT. Most data center companies are REITs. Cyxtera is not yet. But I wouldn't be surprised if they went that way. I love it as a long-term value creator. We've talked about data centers many times. Jason's the augmented reality, and virtual reality, and AI guy. All those use tons and tons of data.

Moser: Yes, they do.

Frankel: As those arenas grow, I actually think some of your services talk about data centers.

Moser: Oh yeah, absolutely.

Frankel: It's a great growth market. I'm excited to see that they made that acquisition. I'm not planning on getting rid of my shares.

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Stocks Mentioned

Starboard Value Acquisition Corp. Stock Quote
Starboard Value Acquisition Corp.
Equinix, Inc. Stock Quote
Equinix, Inc.
$686.53 (2.19%) $14.72
Digital Realty Trust, Inc. Stock Quote
Digital Realty Trust, Inc.
$137.85 (0.89%) $1.22

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