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Switch Considers REIT Conversion With Elliott’s Input

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Published: August 24th, 2021
The data center operator, which The Deal named the company a potential acquisition target in June, has traded at a discount to peers.

Data center operator Switch Inc. (SWCH) will consider becoming a REIT among other potential changes as part of a collaboration with Elliott Management Corp.

The Deal named the company a potential buyout target in June after the $10 billion privatization of data center operator QTS Realty Trust Inc. (QTS) by Blackstone Group Inc. (BX).

Related: CyrusOne, CoreSite, Switch Could Be Targets

Management acknowledged during its second-quarter earnings call on Aug. 5, announcing the plans, that the company’s valuation has lagged those of other data center operators.

Cement tycoon Dennis Alan Troesh has a roughly 13% stake through holdings of Class A and B shares.

Switch played up its rapport with Elliott, which has an 11% stake and is the largest holder of Class A stock, during the call.

“On Elliott[‘s] tone and tenor, they have been very, very productive to work with,” chief legal officer Thomas Morton told investors. “We have enjoyed the relationship with them.”

Likewise, CFO Gabe Nacht lauded Elliott’s diplomacy.

“They do have a certain reputation on the street, but I also think that Elliott’s been working hard to adjust that reputation,” Nacht said. “There are a number of engagements that they get involved with where they work very productively with management. We believe we’re one of those, and we’re very happy to have their involvement.”

Editor’s note: The original, full version of this article was published earlier on The Deal’s premium subscription website. For access, log in to TheDeal.com or use the form below to request a free trial.

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