Bain Bids to Take Chindata Private at 33% Premium

Chindata Group Holdings has received a takeover offer from chief backer Bain Capital that values the Beijing-based data centre operator at around $2.9 billion.

US private equity major Bain, which holds 42.17 percent of the total issued and outstanding share capital of Chindata, offered to buy the shares it does not already own in the company for $8 per American depositary share, Chindata said Wednesday in a press release.

The proposal represents a 33 percent premium to Tuesday’s closing price and a 38 percent premium to the volume-weighted average price during the last 30 trading days, according to Bain. Chindata’s NASDAQ-listed shares closed 14.6 percent higher at $6.94 in Wednesday trade, leaving them down 12.6 percent in the year to date.

“We believe that we offer a high degree of closing certainty and are well positioned to negotiate and complete the proposed acquisition on an expedited basis,” Bain said in a letter addressed to Chindata’s board of directors.

Ad Hoc Panel Mulls Offer

Chindata on Thursday morning announced the formation of a special committee to evaluate and consider Bain’s offer. The panel consists of three independent directors: Thomas J Manning, who will chair the committee, as well as Gang Yu and Weili Hong.

Bain told the board that it plans to finance the acquisition with a combination of equity and debt capital and that it does not intend to sell its stake in Chindata to any third party.

Bloomberg reported in April of last year that Chindata had begun to field preliminary takeover offers from potential suitors including Shanghai-based GDS Holdings and EQT-backed EdgeConneX, spurring a brief stock surge at the time.

Chindata founder Alex Ju left his CEO post in late 2021, a little over a year after Bain led the company’s IPO with backing from institutional investors APG, BlackRock and the Canada Pension Plan Investment Board. Ju agreed to a “transition agreement” in which he would assume a non-executive role at the firm he established in 2015.

Huapeng Wu succeeded Ju as Chindata’s new CEO in March 2022. Wu joined Chindata in 2019 as head of the company’s domestic business and was credited with having strengthened the data centre operator’s customer network, telecom partnerships and government relations.

Positive Signs

If the planned privatisation goes ahead, Bain will take full control of a company that posted 56.8 percent year-on-year revenue growth and a 167.5 percent net income surge in the first quarter of 2023.

The total capacity of Chindata’s platform, which comprises data centres in China, India and Malaysia, rose by 27 megawatts to reach 898MW during the first three months of the year, up from 704MW in the same period of 2022.

“During the first quarter of 2023, the company continued to advance with our highly demanding project delivery schedule,” Wu said in Chindata’s quarterly report. “Demand from existing clients was healthy and ramp up was as scheduled. As a result, we continued to grow our top and bottom line, with adjusted EBITDA beating market consensus for eleven consecutive quarters.”