Some big data center consolidation news has hit the wires this morning. The data center REITs Digital Realty and DuPont Fabros have entered into a definitive agreement to merge in an all stock transaction.
DuPont Fabros operates eleven data centers in the key hubs of northern Virginia, Chicago, and Silicon Valley. They had one in New Jersey too until last June, when they sold it to QTS. And they are currently developing locations in both Toronto, Canada and Portland, Oregon - with the former being at a more advanced stage than the latter. The total footprint currently spans some 3.3M gross square feet, which is fed by some 287MW of power.
Digital Realty, of course, is rather larger with more than 150 facilities under management spanning more than 25M square feet. It's Digital Realty's first big move since the purchase of Telx two years ago. DuPont Fabros' assets will fit right into the company's original big-customer-focused type of business.
In terms of the financials, DuPont Fabros shareholders will get 0.545 Digital Realty shares for each share they currently hold, which gives them about a 15% premium to the stock price as of yesterday. Along with the assumption of $1.6B in debt, that works out to a total purchase price in the neighborhood of $7.6B based on current stock prices. Digital Realty has a fully committed bridge loan facility from BofA Merril Lynch and Citigroup lined up to finance the purchase.
Digital Realty expects to realize somewhere near $18M in annual synergies from combining the two companies' business operations.