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A special-purpose acquisition company backed by shareholder activist Starboard Value LP is nearing a deal to combine with data-center provider Cyxtera Technologies Inc., according to people familiar with the matter.

Starboard Value Acquisition Corp. is discussing a deal that would value Cyxtera at around $3.4 billion including debt, the people said. It could be finalized by Monday assuming the talks don’t fall apart, they said.

Cyxtera’s existing owners, including private-equity firms BC Partners and Medina Capital, plan to roll their equity stakes into the combined company, the people said.

Cyxtera has more than 60 data centers around the world, serving thousands of companies and government agencies. It is one of the largest so-called retail-colocation providers, with its data centers serving and connecting multiple customers and supporting the widespread adoption of hybrid-cloud infrastructure. Demand for data management was already on the rise thanks to the growth of everything from drones to internet-enabled gadgets when remote work and schooling necessitated by Covid-19 gave the sector an additional boost.

SPACs, which have exploded in popularity, raise money in an initial public offering and then look for a business to combine with in a deal that gives the target an alternative route to the public markets. The Starboard vehicle raised $360 million when it went public last year. In addition to that, Cyxtera is expected to receive funds raised alongside the merger, as is typical in SPAC deals.

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