Overview of the Target

The target of this acquisition is the European colocation business, which is being developed and managed by STACK Infrastructure, a portfolio company of Blue Owl Digital Infrastructure Advisors LLC (BODI). This Company operates seven data center facilities strategically located across five key European markets: Stockholm, Oslo, Copenhagen, Milan, and Geneva. These locations are specifically chosen for their high interconnectivity and are designed to meet the data center and connectivity needs of a diverse range of blue-chip enterprise clients, including telecommunications carriers, IT services companies, and financial institutions.

In light of this transaction, Sherif Rizkalla, CEO of the Company, expressed enthusiasm about partnering with Apollo to accelerate growth as a new, standalone entity. Leveraging Apollo's substantial infrastructure expertise and extensive resources, the Company aims to position itself optimally to seize industry growth opportunities and enhance value for stakeholders.

Industry Overview in Europe

The European data center market has been experiencing substantial growth, driven by the relentless demand for digital infrastructure and services. With an increasing reliance on cloud computing, big data analytics, and the Internet of Things (IoT), enterprises across various sectors are seeking robust data center solutions. This rising demand has created a favorable ecosystem for colocation services, particularly in regions with high connectivity standards.

Additionally, Europe boasts a strong regulatory framework that supports the deployment of advanced data center technologies. Countries prioritizing sustainability and energy efficiency are paving the way for innovative green data centers, thereby appealing to environmentally conscious consumers. The trend toward increasing compliance with data protection laws, such as GDPR, further underlines the necessity for secure and scalable data center solutions.

In particular, the Nordic countries, including Sweden and Norway, have emerged as attractive destinations for data center investments. Favorable climatic conditions contribute to lower cooling costs, which is a significant operational advantage. Meanwhile, the growing demand from hyperscale cloud operators is driving the development of interconnected colocation facilities throughout the region.

Rationale Behind the Deal

The acquisition of the European colocation business aligns with Apollo's long-term strategy of investing in high-quality, interconnected data center infrastructures with unique value propositions. Industry experts believe that the need for scalable and resilient data center solutions will only intensify over the coming years, creating a sustainable growth trajectory for the Company.

By acquiring this business, Apollo positions itself to leverage substantial industry dynamics and capitalize on emerging market trends. This transaction will enable the management team and existing employees to transition effectively into the new organization, aiming to enhance its service offerings and expand its presence across Europe.

Information About the Investor

Apollo Global Management (NYSE: APO) is a distinguished alternative asset manager recognized for its global investments spanning various asset classes. The firm has a proven track record of delivering excess returns across a risk-reward spectrum, from investment-grade credit to private equity. With approximately $751 billion in assets under management as of December 31, 2024, Apollo's extensive investment expertise allows it to offer innovative capital solutions tailored for growth.

Apollo’s investment philosophy emphasizes a patient and creative approach. By focusing on aligning interests among clients, portfolio companies, and communities, Apollo aims to create positive outcomes across multiple stakeholders. The firm has a robust infrastructure platform, enhancing its capacity to support the growth of the acquired colocation business.

View of Dealert

This acquisition appears to be a strategic move by Apollo to tap into the burgeoning demand within the European data center market. Given the strengths of the Company, including its strategic locations and established client base, the deal is poised to yield positive long-term returns. The favorable market environment, coupled with Apollo's investment acumen, suggests that the prospects for growth remain high.

Moreover, the migration of the existing management team and employees to the new organization indicates continuity, which is essential for maintaining service quality and client satisfaction. This is integral to fostering long-term relationships in the highly competitive data center industry. Thus, the deal is strategically positioned for success.

In conclusion, as demand for colocation services continues to escalate, particularly in Europe, Apollo's acquisition of this colocation business may indeed represent a compelling investment opportunity. The convergence of supportive market dynamics and Apollo's expertise should enhance the Company's overall market footprint and operational capabilities.

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