More billions: Manny Medina’s Cyxtera going public in 10-figure transaction

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Lightning has struck twice for longtime South Florida developer and tech builder Manny Medina.

Medina’s Cyxtera data center company announced Monday it would be going public as part of a $3.4 billion transaction. It comes just two weeks after Medina announced his cybersecurity group, Appgate, would also be going public in a $1 billion deal.

“Cyxtera always slated to be publicly traded company,” Medina said in an interview Monday. “It was just a matter of when. Given that last year was such a good year for the company — we performed extremely well — we were ready to be publicly traded.”

The firm that would come to be known as Cyxtera was announced in 2016, when Medina and his partners began acquiring data centers from CenturyLink, now known as Lumen. Medina had first entered the data center business through his development group, Terremark, at the turn of the last century; Terremark was acquired by Verizon for a total of $2 billion in 2011.

Today, Cyxtera operates 61 data centers, often colloquially known as server farms, in 29 markets around the world, serving 2,300 clients. It also provides software and other technology solutions.

The transaction announced Monday will see a unit of Starboard Value LP, a hedge fund, acquire Cyxtera through proceeds of approximately $654 million, including a $250 million private placement of common stock at $10 a share. Once the deal is completed, Cyxtera expects its common stock to be listed on the NASDAQ exchange under the symbol CYXT. Current owners of Cyxtera, including co-founding investment group BC Partners, will retain approximately 58% ownership of the combined company. Starwood CEO Jeff Smith and BC Partners’ Partner, Chairman, and Chairman of the Executive Committee Raymond Svider and Partner Fahim Ahmed will also serve on the combined company’s board.

The deal is expected to close in mid-2021.

In October, ratings group Moody’s published a review of Cyxtera. It found the company faced “persistent difficulties” growing revenue and earnings thanks to “weaker than expected” bookings and “intense” industry competition. As a result, Moody’s said, the company was likely facing a difficult cash situation.

In the interview, Medina said any challenges the company may have faced were behind it now that the carve-out from CenturyLink-Lumen was completed.

“We’re done with the sausage-making,” he said. “So reading Moody’s, that doesn’t take into consideration that at the given time, that was the challenge.”

He continued:

“This is a gigantic market, and the tailwinds are enormous — the explosion of data is not going to stop anytime soon. All this tech stuff you’re reading about, whatever else may be true, they all need to be connected, and we’re the plumbing, like the picks and axes in a gold rush. We don’t know how many will succeed, but they all need what we have.”

According to a Cyxtera release, the company generated some $690 million in revenues and adjusted earnings of $213 million in 2020. Cyxtera CEO and longtime Medina colleague Nelson Fonseca said the company now operates as a “live marketplace” where Cyxtera clients can transact with one another using the Cyxtera platform.

“This is a big market,” Fonseca said. “There are going to be a lot of winners.”

Said Jeff Smith, Starwood founder CEO: “Cyxtera is at an exciting inflection point, poised for significantly improved growth and profitability in an industry with powerful secular tailwinds.”

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