Chindata Draws $3.4B Rival Bid From China Merchants After Bain Offer

A little over a month after hearing a takeover offer from Bain Capital, Chindata Group Holdings has received a rival proposal from state-backed China Merchants Capital representing a 15 percent premium to Bain’s privatisation bid.

CMC is making a non-binding offer of $9.20 in cash per American depositary share for the Beijing-based data centre operator, the division of China Merchants Group said Monday in a release. US private equity major Bain, which holds 42.17 percent of the total issued and outstanding share capital of Chindata, in early June offered to buy the shares it does not already own in the company for $8 per ADS.

CMC’s proposed transaction values Chindata at $3.4 billion in cash and represents a 52.6 percent premium to the undisturbed trading price of the group’s NASDAQ-traded shares on 5 June.

In a letter to the Chindata board, CMC director Jian Guo said the plan presents “a more compelling opportunity” to shareholders with a chance to realise their investment at a higher price. He gave assurances that CMC intends to retain key staff and accelerate Chindata’s growth strategies.

State Steps In

CMC, which manages 68 funds with assets under management of more than $40 billion, told the board it plans to finance the acquisition through a combination of equity and debt.

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

In November, the news service revealed that state-owned China Merchants Group was exploring a takeover bid for Chindata, citing people familiar with the matter.

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.

More Data to Consider

Upon receiving Bain’s offer in June, Chindata’s board quickly announced the formation of a special committee to evaluate and consider the proposal, consisting of independent directors Thomas J Manning, Gang Yu and Weili Hong.

“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 its letter to the board.

Chindata 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 the company’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.