Coresite Acquisition: Key Details, Impact, and What Comes Next

American Tower's acquisition of CoreSite for $10.1 billion marks a significant move in the communications infrastructure sector. This strategic purchase aims to enhance American Tower's capabilities by integrating CoreSite's data centers and cloud on-ramps, positioning the company to better leverage emerging edge compute opportunities and the ongoing 5G rollout.

What Is Coresite?

Founded around 2000, CoreSite provides colocation, interconnection, and cloud networking services. Its extensive network of 28 data centers across 11 U.S. markets and over 40,000 customer interconnections set it apart. CoreSite's unique selling points include significant cost savings through direct cloud connections, operational excellence, and high-density colocation designed for compute-intensive applications. As an NVIDIA DGX-Ready Data Center Partner, CoreSite also supports accelerated AI adoption.

Who Acquired Coresite?

American Tower is a leading independent owner, operator, and developer of wireless and broadcast communications real estate. The company provides solutions to deploy and support wireless networks, including the ownership and operation of communication towers and other digital communications real estate. Operating in 22 countries across five continents, American Tower holds a significant market position with approximately 149,000 global assets. It is recognized as a Fortune 500, S&P 500, and Forbes Global 2000 company, underscoring its industry influence.

When Was Coresite Acquired?

American Tower announced its acquisition of CoreSite on November 15, 2021, and completed the transaction on December 28, 2021. This acquisition occurred during a period of heightened demand for data center services, driven by the COVID-19 pandemic and the accelerating deployment of 5G networks. The timing aligns with industry trends emphasizing the importance of interconnection capabilities and cloud on-ramps, crucial for supporting low-latency applications and edge computing.

Why Was Coresite Acquired?

• Market Expansion: The acquisition of CoreSite allows American Tower to significantly expand its presence in the data center market. By integrating CoreSite's 25 data centers and extensive interconnection capabilities, American Tower can enhance its portfolio and drive growth through emerging edge compute opportunities. This strategic move also positions the company to explore potential international expansion, leveraging its global footprint to support customer needs in additional markets.
• Technology Integration: CoreSite's network-centric, highly interconnected data centers and cloud on-ramps are crucial for the evolving 5G networks and Edge computing. The integration of these facilities with American Tower's existing infrastructure creates a comprehensive communications real estate platform. This platform will support 5G deployments and the convergence of wireless and wireline networks, enhancing American Tower's technological capabilities and enabling the development of low-latency applications.
• Competitive Advantage: The acquisition strengthens American Tower's competitive position by combining its extensive tower real estate with CoreSite's high-quality data center facilities. This strategic combination allows American Tower to offer an enhanced value proposition for network and cloud providers, service integrators, and enterprise customers. Additionally, the transaction is expected to be accretive to American Tower’s AFFO per Share, driving long-term value creation for customers and shareholders.

Acquisition Terms

• Acquisition Price: $10.1 billion
• Payment Method: Cash
• Key Conditions or Agreements:
  • The transaction was unanimously approved by the boards of directors of both companies.
  • The tender offer is subject to the tender of at least a majority of the outstanding shares of common stock of CoreSite and certain other customary conditions.
  • CoreSite plans to declare and pay its fourth quarter dividend during the fourth quarter of 2021 and no later than the close of the transaction.
  • American Tower intends to finance the transaction in a manner consistent with maintaining its investment grade credit rating and has obtained committed financing from J.P. Morgan.
  • The transaction is expected to close by the end of 2021, or shortly thereafter.
  • The acquisition was completed through a merger of one of American Tower’s wholly owned subsidiaries with and into CoreSite.
  • The transaction is anticipated to be modestly accretive to American Tower’s AFFO per Share initially, and increasingly accretive over time.
  • American Tower aims to have full control and flexibility over the acquired assets.
  • The company plans to grow CoreSite through reinvesting its cash flow and is considering new developments, particularly in Silicon Valley.
  • American Tower is focusing on the Edge and organic growth within the US before considering international expansion.
  • The company is not looking to compete with large US data center businesses but aims to develop a unique set of high-quality assets.

Impact on Coresite

The acquisition of CoreSite by American Tower has led to significant changes in operations and management. CoreSite's management team, known for their expertise with cloud service providers, has been integrated into American Tower, creating a more comprehensive communications real estate platform. This integration aims to leverage CoreSite's highly interconnected data centers and cloud on-ramps, enhancing American Tower's mobile edge compute business. The combined company now has full control and flexibility over CoreSite's assets, which are crucial for supporting 5G deployments and edge computing opportunities.

In terms of product offerings and services, the acquisition has broadened the range of solutions available to customers. CoreSite's data centers and interconnection solutions complement American Tower's existing communications sites, creating an extended edge for customers. This strategic move is expected to enhance service delivery, particularly for high-performance, low-latency applications. While specific employee reactions are not detailed, the integration of talent and resources from both companies suggests a positive outlook. Customer reactions have been favorable, with the combined company poised to address evolving needs through an enhanced value proposition.

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