CBRE agrees to buy Onnec for £460m cash plus up to £300m earnout

CBRE Group has agreed to buy Onnec Group Limited, a London-based data center infrastructure services provider, for an initial £460 million ($610 million) in cash.

The definitive agreement carries a multi-year earnout of up to £300 million ($400 million), contingent on Onnec meeting certain growth targets. CBRE expects the deal to close by the end of the year. The earnout puts just under 40% of a £760 million maximum outlay on that growth test.

Onnec is forecast to produce about £370 million ($498 million) of revenue and more than £50 million ($67 million) of core EBITDA in 2027, according to CBRE. Against those figures, the initial cash price works out to roughly 1.2 times forecast revenue and no more than 9.2 times forecast core EBITDA. Adding the full earnout would take the outlay to £760 million, or less than 15.2 times the same earnings forecast.

Onnec was founded in 1986 and designs, deploys and maintains network, fiber and data center infrastructure for technology companies across Europe and Asia Pacific. After closing, it will operate inside CBRE's Critical Infrastructure Services line of business.

“CBRE is pursuing an explicit strategy to build a global infrastructure services business to complement our real estate services business,” said Vikram Kohli, CBRE's chief operating officer. “We've long believed Onnec is an excellent fit in this strategy.” Barry Horgan, Onnec's chairman, said the company would gain “the platform and expertise to broaden our capabilities” as part of CBRE.

J.P. Morgan Securities is financial advisor and Simpson, Thacher & Bartlett is legal advisor to CBRE; Goldman Sachs International advises Onnec on finance and Freshfields on law.

What CBRE is buying is design, deployment and maintenance work rather than data center capacity. The revenue comes from installing and servicing network and fiber inside facilities, and the customer base stretches across Europe and Asia Pacific. That geographic spread is likely the point for a buyer describing a global services build-out, since the price is being paid for labor and contracts attached to third-party facilities rather than for assets CBRE would own outright.