Reuben Firm Seeking us Float

3 May 2009 – The Sunday Times

THE billionaire Reuben brothers are locked in talks with an American hedge fund about plans to float their fast-growing data-centre business Global Switch in the US.

They are having detailed discussions with SP Acquisitions, a shell company set up to handle takeovers, which is managed by Steel Partners, an activist UShedge fund.

It is thought that SP Acquisitions is interested in buying a stake of between 15% and 20% in the business for around $430m (£288m).

If a deal goes ahead, Global Switch would be injected into SP Acquisition Holdings, which is listed on NYSE Alternext, an American stock exchange based in New York.

The Reubens would continue to own 80% of the business, or they could sell off more of their stake in the market.

City sources said talks were at an advanced stage, but the two parties were still wrangling over price and there was no certainty that a deal would proceed.

The Reubens have hired CB Richard Ellis, the world’s biggest property consultant, to carry out a valuation of Global Switch, which is expected to price the business at around £1.9 billion.

It has been one of the Reubens’ most successful investments. Global Switch data centres are leased to blue-chip companies including IBM, Shell, BP and Microsoft.

The data-centre market has enjoyed phenomenal growth in demand, spurred by regulatory requirements that have increased the need for companies to store information and have back-up IT facilities as part of their disaster-recovery plans.

During the past few years the demand has led to huge growth in Global Switch’s earnings. In the 2010 financial year the company is projected to generate underlying earnings of £140m – up from £91m in 2009. By 2011 the group expects earnings to rise to £175m.

Global Switch is the largest data-centre business in Europe with a property portfolio covering 2.8m sq ft, which is 87% let. By next year – based on existing discussions – the company is optimistic it will be 100% leased.

A spokesman for Steel Partners and SP Acquisition Holdings declined to comment, as did the Reuben brothers.