Digital Realty, a company with an existing footprint of 145 data center properties across 33 global metropolitan areas located throughout North America, Europe, Asia and Australia, has entered into a definitive agreement to buy DuPont Fabros in an all-stock transaction.
DuPont Fabros is a real estate investment trust (REIT) headquartered in Washington, D.C. Its 12 data centers are located in three major U.S. metro areas and total 3.5 million gross square feet and 301.5 megawatts of available critical load to power the servers and computing equipment of its customers.
The transaction is valued at approximately $7.6 billion in enterprise value. The consummation of the transaction is subject to customary closing conditions, including approval by the shareholders of Digital Realty and DuPont Fabros.
The transaction would deliver the following key strategic and financial benefits:
- Enhances Ability to Serve Top U.S. Metro Areas – DuPont Fabros’ portfolio is concentrated in top U.S. data center metro areas across Northern Virginia, Chicago and Silicon Valley. The transaction would help grow Digital Realty’s presence in strategic, high-demand metro areas with strong growth prospects.
- Expands Hyper-Scale Product Offering – DuPont Fabros’ 12 purpose-built, in-service data centers would significantly expand Digital Realty’s hyper-scale product offering and improve its ability to meet the rapidly growing needs of cloud and cloud-like customers, in addition to enterprise customers undertaking the shift to a hybrid cloud architecture.
- Solidifies Blue-Chip Customer Base – DuPont Fabros’ impressive roster of blue-chip customers would further enhance the credit quality of Digital Realty’s existing customer base.
- Development Pipeline Provides External Growth Potential – DuPont Fabros’ six data center development projects currently under construction are 48% pre-leased and represent a total expected investment of approximately $750 million, and amount to roughly a 26% expansion of its standalone critical load capacity. These projects are located in Ashburn, Chicago, Santa Clara and Toronto, all metro areas where Digital Realty has an existing presence. These six projects are expected to be delivered over the next 12 months, representing a solid pipeline of future growth potential. In addition, 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 recently acquired in Phoenix.
- Size and Scale Generate Incremental Benefits –The two companies’ operating models would be highly complementary. Given the enhanced size and scale, the combined company is also expected to have an efficient cost structure. The combination of the two companies is expected to create an opportunity to realize up to $18 million of annualized overhead savings, resulting from both companies’ complementary business operations.
“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 (CEO). “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.”