San Francisco-based Digital Realty (NYSE: DLR), the world’s largest full scale data center provider, agreed to merge with Washington, D.C.-based smaller rival DuPont Fabros (NYSE: DFT) in an all-stock deal reflecting an enterprise value of $7.6 billion. Under the deal, DuPont Fabros shareholders will receive a fixed exchange ratio of 0.545 Digital Realty shares per DuPont Fabros share.
Digital Realty supports the data center, colocation and interconnection strategies of more than 2,300 firms across a portfolio of 156 data centers located throughout North America, Europe, Asia and Australia. The company’s clients include domestic and international companies of all sizes, ranging from financial services, cloud and information technology services, to manufacturing, energy, gaming, life sciences and consumer products.
DuPont Fabros is a leading owner, developer, operator and manager of enterprise-class, carrier-neutral, large multi-tenant data centers. The company’s 12 data centers are concentrated in three major U.S. metro areas across Northern Virginia, Chicago and Silicon Valley, with a total of 3.5 million gross square feet and 301.5 megawatts of available critical load to power the servers and computing equipment of its customers. DuPont Fabros operates as a real estate investment trust (REIT).
“This strategic and complementary transaction significantly enhances Digital Realty’s ability to support the growth of hyper-scale users in the top U.S. data center metro areas, while providing meaningful customer and geographic diversification for DuPont Fabros,” said A. William Stein, Digital Realty’s Chief Executive Officer. “The combination is expected to generate both operating and financial benefits, and I’d like to congratulate Scott Peterson, Mark Walker and their team on successfully negotiating the largest transaction in our company’s history, a combination that we believe will enhance our ability to create significant long-term value for both sets of shareholders.”
“We are excited to deliver this compelling transaction to our shareholders and execute upon two of the strategic objectives embodied in our corporate vision – diversifying our customer base and expanding our geographic presence,” said Christopher P. Eldredge, DuPont Fabros’ President & Chief Executive Officer.
Digital Realty has obtained a fully committed bridge loan facility from BofA Merrill Lynch and Citigroup which will be available, if needed, to finance the transaction. The debt assumed in the transaction is expected to be permanently refinanced with a combination of investment grade corporate bonds and other financings.
The deal has been unanimously approved by the boards of directors of both companies and is expected to close in the second half of 2017, subject to approval of DuPont Fabros and Digital Realty shareholders and other customary closing conditions.
BofA Merrill Lynch and Citigroup are acting as financial advisors and Latham & Watkins LLP is acting as legal advisor to Digital Realty. Goldman Sachs & Co. LLC is acting as financial advisor and Hogan Lovells US LLP is acting as legal advisor to DuPont Fabros.