Digital Realty expands data centre reach with DuPont Fabros buy
BENGALURU: Digital Realty Trust Inc said it would buy fellow data centre operator DuPont Fabros Technology Inc for an enterprise value of about US$7.6bil, its biggest-ever deal, to help expand in high-demand markets in the United States amid a rapid shift to the cloud by technology companies.
DuPont Fabros’s shares rose as much as 14.6% to hit a record high of US$63.46, just below the offer price of US$63.60 based on last Thursday’s close.
Washington-based DuPont Fabros operates 12 data centres in three major US markets, including Silicon Valley and Northern Virginia, while Digital Realty operates 145 data centres globally.
Digital Realty and DuPont Fabros, which rent out space that companies use for data centres, have also benefited from the surge in demand for data and video.
The combined company would be the “home to the cloud,” Digital Realty chief executive William Stein said on a conference call last Friday.
The deal, which would add companies such as Facebook Inc and Yahoo Inc to Digital Realty’s customer base, is expected to close in the second half.
DuPont Fabros shareholders will receive a fixed exchange ratio of 0.545 Digital Realty shares per share held, the companies said.
Based on Digital Realty’s Thursday close, the offer is worth US$63.60 per share, a premium of 14.9% to DuPont Fabros’s close.
The implied price per share is US$64.32, according to a Digital Realty presentation.
The equity value of the deal is about US$4.95bil based on DuPont Fabros’s 77.8 million shares outstanding as of April 2, according to Thomson Reuters data.
“The addition of (DuPont Fabros) should enhance (Digital Realty’s) growth prospects, as it’s acquiring an asset that’s growing at plus 10% per year, with recent momentum including a 28.8 MW lease signed by who we believe to be (Apple),” Wells Fargo analyst Jennifer Fritzsche wrote in a client note.
The deal has the potential to realise up to US$18mil of annualised overhead savings, the companies said.