The Digital Realty dropped a consolidation bomb yesterday along with its quarterly earnings. The giant data center REIT will be merging with the European data center provider Interxion in an all stock deal.
Interxion's footprint spans more than 50 facilities in 13 major European markets that combined are one of the most connected group of buildings on the continent. Nine of those facilities are in their home turf of Amsterdam, while the hub of Frankfurt has 13 and Paris another 7. The company has also had a lot of success down in Marseilles where so many cables land from Asia, the Middle East, and Africa.
Digital Realty has a much larger total footprint worldwide, but its European scope has been somewhat more limited geographically, with a big presence in Amsterdam (4) and London (12), two facilities in Frankfurt, and another three over in Dublin. The deal will give that European core some greater breadth. The combined company will have some 260+ facilities in 21 countries.
Under the terms of the deal, Interxion investors will get 0.7067 Digital Realty shares for each Interxion share. That values Interxion at $93.48 per share, and the deal at about $8.4B including net debt. Both boards of directors have approved the transaction, which is anticipated to close 'in 2020'. That is admittedly a bit of a large target, but I wonder how close a look European regulators will have at the deal.
On the financial front, Digital Realty reported core FFO of $1.67 per share and net income per share of $0.24 on revenues of $806M. That seems to be slightly above analyst consensus numbers.
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