There really was some fire underneath the smoke this time. This morning, Digital Realty Trust announced a definitive agreement to purchase Telx for $1.886B. The deal takes Digital Realty deeper into the world of interconnection than it has previously delved, and further from its real estate roots.
Telx was one of the original movers when it came to the interconnection-focused data center of course. After plans to IPO fell through four or five years ago, the private equity groups ABRY Partners and Berkshire Partners stepped in and bought the company. Today Telx operates 20 facilities and 1.3M square feet of space. 11 of those already lie within Digital Realty's footprint, so the integration isn't likely to be all that difficult.
Digital Realty has been looking to shake up the interconnection market (in its favor) for a while now, and has been one of the big guns behind the Open-IX movement. With the purchase of Telx, which along with Equinix was on the other side of that debate, the thing to watch will be how Digital Realty's approach evolves from here.
Digital Realty has received a commitment for $1.85B from a syndicate of lenders to help pay for the deal. But they're also planning to raise money via a stock offering. This morning they also announced plans to sell 10.5M shares of stock, which would raise more than $700M of cash to help make the deal happen.