RDG Pressures Internap

Internap is facing calls from a former protege of Carl Icahn to put itself up for sale.  RDG Capital Fund Management, the investment vehicle of Russell Glass and a significant shareholder of Internap, put out a public call today citing shareholder support for a sale of the company.

The case basically rests on the idea that data centers M&As are happening at much higher EBITDA than Internap has long been trading at and the fact that there are numerous buyers out there actively looking.  Of course, despite its focus on colo and cloud infrastructure in recent years, Internap is not quite a pure data center play due to the significant (25%) chunk of IP services revenue it still has.  Q2 numbers came in light on both the top and bottom lines, although full year guidance was maintained.

Glass was the President of Icahn Associates, and the influence of his former boss shows in the way he approaches the role of activist shareholder.  The company has acknowledged the possibility in the past and its responsibility to consider strategic alternatives, but apparently Glass isn’t seeing the sort of concrete steps he’d like to see and is looking to apply some public pressure.

If Internap does put itself up for sale, there really are a variety of potential buyers.  Private equity buyers that feel they could restructure and operate the business far from the public eye would probably head the list, whereas REITs would probably be more likely to shy away from the IP pieces.  But there are also some interesting strategic buyers in the world of managed services that might see both synergies and growth opportunities in Internap’s assets, like GTT for example.

That being said, having an Icahn protege poking around the infrastructure world looking for bargains after the way the iconic billionaire himself has run XO over the last decade could ruffle a few feathers the wrong way.  I wonder what other assets he is looking at.

 

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Categories: Datacenter · Mergers and Acquisitions