SAN FRANCISCO AND WASHINGTON, D.C. — Data center REIT Digital Realty Trust Inc., (NYSE: DLR) has entered into an agreement to acquire competitor DuPont Fabros Technology Inc. (NYSE: DFT) in an all-stock merger with an enterprise value of $7.6 billion.
The deal’s enterprise value includes $1.6 billion of assumed debt that is expected to be refinanced with a combination of investment-grade corporate bonds, among other securities. The merger is expected to close during the third or fourth quarter.
Under the terms of the agreement, DuPont Fabros’ shareholders will receive 0.545 shares of Digital Realty stock for each share of DuPont Fabros stock. The merger is expected to generate as much as $18 million in overhead savings per year.
“We are excited to execute two of the strategic objectives embodied in our corporate vision — diversifying our customer base and expanding our geographic presence,” says A. William Stein, CEO of San Francisco-based Digital Realty. “We believe this combination will enhance our ability to create significant long-term value for both sets of shareholders.”
According to the company’s annual report, Digital Realty’s portfolio consists of 145 properties totaling roughly 23 million square feet across 33 global metropolitan areas. As of June 1, 2017, DuPont Fabros operates 12 data centers totaling approximately 3.5 million square feet across the United States and Canada.
The transaction creates an entity with a combined 26.5 million square feet of data centers across 157 markets in 12 countries.
DuPont Fabros, based in Washington, D.C., also has six data centers under construction in markets in which Digital Realty operates. Those projects represent a capital investment of about $750 million, are 48 percent preleased and are expected to be delivered at various times over the next year.
Bank of America Merrill Lynch and CitiGroup served as financial advisors to Digital Realty, and Los Angeles-based Latham & Watkins LLC provided the firm legal counsel. Goldman Sachs & Co. LLC acted as financial advisor to DuPont Fabros while Hogan Lovells US LLP served as legal advisor.
Digital Realty’s stock price closed at $113.34 per share on Friday, June 9, up from $101.67 per share a year ago. DuPont Fabros’ stock price closed at $60.79 per share on June 9, up from $46.34 per share a year earlier.
— Taylor Williams