Chinese firm GDS is said to weigh buying GLP’s data centers

GDS Holdings Ltd. is considering acquiring GLP Pte’s data centers business as the Chinese cloud computing company seeks to expand its digital infrastructure capacity in the world’s second-largest economy, according to people familiar with the matter.

GDS, a developer and operator of high-performance data centers across China, is holding preliminary talks with Singapore investment manager GLP over a potential transaction that could value the assets at $8 billion to $10 billion, the people said, asking not to be identified because the deliberations are private. As part of the deal GLP would become a shareholder in Shanghai-based GDS, the people said.

Considerations are at an early stage and the companies could decide against pursuing a transaction, the people said. Details including valuation and structure of a deal could change, they said.

Representatives for GDS and GLP didn’t respond to phone calls, emails and text messages requesting comment.

GDS shares in Hong Kong were up as much as 4.6% following the Bloomberg News report, their highest level in two weeks, giving the company a market value of $14.4 billion.

GDS raised $1.9 billion in a Hong Kong secondary listing last year, according to data compiled by Bloomberg, joining a cohort of U.S.-traded Chinese firms seeking to expand their investor bases. Chief Executive Officer William Huang said in a November Bloomberg Television interview that the company plans to use the proceeds primarily to invest in data centers in China, Hong Kong and possibly Southeast Asia. GDS might also look at M&A opportunities in China and beyond, Huang said.

GLP has been developing GLP Huailai Internet Data Centre in Hebei province, northern China, with a total investment of about 10 billion yuan ($1.6 billion), according to its website. The facility will offer more than 15,000 cabinets, which can hold about 200,000 servers, once the project is finished. Bloomberg