Data centre operator Digital Realty has agreed to buy DuPont Fabros, the owner of 12 in-service multi-tenant data centres, in an all-stock transaction worth USD 7.6 billion. The total amount includes USD 1.6 billion of assumed debt.
The deal, subject to the usual conditions, is expected to close in the second half. It has been unanimously approved by the boards of directors of both Digital Realty and DuPont Fabros. Under its terms, DuPont Fabros shareholders will receive a fixed exchange ratio of 0.545 Digital Realty shares per DuPont Fabros share.
The combined company is expected to have the highest EBITDA margin of any US-based publicly-traded data centre REIT. The combination is expected to produce up to USD 18 million of overhead savings per year. The deal will be accretive immediately upon closing, and is expected to further improve balance sheet strength.
In case it is needed, Digital Realty has obtained a fully committed bridge loan facility from BofA Merrill Lynch and Citigroupwhich. The debt will be refinanced through a corporate bonds and other financings.
The DuPont Fabros portfolio is concentrated in metro areas across Northern Virginia, Chicago and Silicon Valley. It will push Digital Realty's presence in strategic, high-demand metro areas with strong growth prospects, expanding on Digital Realty's existing footprint of 145 properties across 33 global metropolitan areas. The deal will also help broaden the company’s colocation and interconnection product offerings and solidify its blue-chip customer base.
DuPoint Fabros also has six data centre projects under development. Almost half (48%) are pre-leased and represent a total expected investment of USD 750 million. The projects are located in Ashburn, Chicago, Santa Clara and Toronto, all metro areas where Digital Realty has an existing presence. The six projects should be delivered over the next 12 months, representing a solid pipeline of future growth potential, Digital Realty said. DuPont Fabros owns strategic land holdings in Ashburn and Oregon, which will support the future delivery of up to 163 megawatts of incremental capacity, along with 56 acres of land.
