Multiplex problems increase pressure on Global Switch sale

 

With Australian property conglomerate Multiplex’s shares taking another dive earlier this month as a result of the well publicised problems on the Wembley Stadium project in North West London, speculation over the company’s ownership of data centre operator Global Switch has increased once again. 

Multiplex’s share price has almost halved in the first six months of this year and the company has already made one significant disposal, being its stake in the huge White City retail development in West London .   Indeed, the company has already officially declared its stake in Global Switch is likely to be sold within the next 18 months (as of June 05).  However, the company’s problems elsewhere might increase their desire to execute a deal sooner rather than later.

But a deal on Global Switch may be hard to achieve given the complicated ownership structure:  Multiplex’s involvement is via its takeover of Chelsfield plc, a deal completed in partnership with the Reuben brothers and further 25% of Global Switch is held by a third party, Morley Fund Management. 

Recent press speculation in the UK has suggested one interested party may be Global Switch founder and previous CEO Andy Ruhan, who is being touted as being in partnership with  renowned City banker Robin Saunders, herself formerly of WestLB, according to a recent article in The Times.

The irony of this situation is that the UK data centre market is seeing an unprecedented boom at present and one of the biggest possible sources of purpose built space is the new Global Switch 2 building, sitting between Global Switch 1 and Telehouse in the Docklands.  This purpose built building offers some 500,000 sq ft net over 10 floors and is still roughly half empty and remains the facility with the lowest level of occupancy in the Docklands market today. Yet the current uncertainties regarding the ownership structure of the company can hardly be helping the company sell the remaining space.  It will be interesting to see if the ownership issue can be quickly resolved or if the complicated structure will cause delay. In the meantime, the company’s rivals, both current and those now looking to enter the market, will continue to take advantage of the buoyant conditions.

Tim Anker
The Colocation Exchange
June 2005