Featured Company News – Digital Realty Trust on Cloud Nine as it Acquires Data Center Operator DuPont Fabros Technology

LONDON, UK / ACCESSWIRE / June 13, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for San Francisco, California based Digital Realty Trust, Inc. (NYSE: DLR) and DuPont Fabros Technology, Inc. (NYSE: DFT). Digital Realty Trust announced the acquisition of Washington based DuPont Fabros Technology on June 09, 2017. The all-stock transaction has an enterprise value of approximately $7.6 billion. The deal is one of the biggest transactions done by Digital Realty and allows it to expand its presence in the data center markets and win large, multi-megawatt deals with hyper-scale cloud platforms. For immediate access to our complimentary reports, including today’s coverage, register for free now at:

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Commenting on the acquisition A. William Stein, CEO of Digital Realty said:

“This strategic and complementary transaction significantly enhances Digital Realty’s ability to support the growth of hyper-scale users in the top US data center metro areas, while providing meaningful customer and geographic diversification for DuPont Fabros. The combination is expected to generate both operating and financial benefits.”

Christopher P. Eldredge, President and CEO of DuPont Fabros added:

“As part of Digital Realty, our shareholders will continue to realize the benefits of our high-quality portfolio, with the added benefits of belonging to an even greater data center network with a truly global footprint and a well-diversified customer base. We also believe our shareholders will greatly benefit from Digital Realty’s investment grade balance sheet and more attractive cost of capital.”

Details of the acquisition

As per terms of the acquisition, Digital Realty will offer 0.545 Digital Realty’s shares for each share of DuPont Fabros on a fixed exchange ratio. The $7.6 billion transaction includes debts of $1.6 billion. The transaction has been approved by the Boards of Directors of both companies.

The transaction is expected to close in H2 2017 and is subject to approvals from shareholders, regulatory approvals, and other closing conditions.

Digital Realty has already made arrangements to get a bridge loan from BofA Merrill Lynch and Citigroup, in case it needs to finance the transaction. Digital Realty plans to refinance the assumed debt with a combination of corporate bonds and other means of financing.

Digital Realty has BofA Merrill Lynch and Citigroup as financial advisors and Latham & Watkins LLP as legal advisors whereas DuPont Fabros has Goldman Sachs & Co. LLC as financial advisor and Hogan Lovells US LLP as legal advisors.

Benefits of the acquisition

Digital Realty will be able to expand its presence in strategic, high-demand metro areas across Northern Virginia, Chicago, and Silicon Valley where DuPont Fabros has concentrated presence.

Digital Realty will be able to hyper-scale its product offering and improve its ability to meet the rapidly growing needs of cloud and cloud-like customers as well as enterprise customers shifting to a hybrid cloud architecture with the acquisition of DuPont Fabros’ 12 purpose-built, in-service data centers.

DuPont Fabros is a pioneer in massive “super wholesale” data center leases and has Companies like Microsoft, Facebook, and Apple as its customers. The acquisition will allow Digital Realty to expand its customer base to cover such blue-chip Companies. On a combined basis, investment grade or equivalent customers will represent more than 50% of total revenue and the top three customers will account for approximately 18% of revenue.

DuPont Fabros has six data center projects which are under construction and 48% of these projects have already been pre-leased and represent a total expected investment of approximately $750 million. These projects are expected to be completed within next six months and will add to Digital Realty’s pipeline and increase its growth potential

Both Companies have complementary business models and the merger is expected to provide the most comprehensive product offering in the data center sector. Given the enhanced size and scale, the combined Company is also expected to have the most efficient cost structure and the highest EBITDA margin of any US-based publicly-traded data center REIT.

The acquisition will also result in annual cost synergies of up to $18 million. The transaction is expected to be accretive to Digital Realty and positively impact its EPS.

About both Companies

Digital Realty is a global data center partner that offers the full spectrum of data center solutions. These data centers are equipped to bring critical data center, cloud, connectivity, and network elements together under a single, secure environment. This helps the clients in scaling up their operations without any restrictions or constraints regarding space, power and bandwidth etc. Digital Realty has 119 data centers in North America, 30 data centers in Europe, and 7 data centers in Asia/Pacific region. Digital Realty’s clients include domestic and international Companies of all sizes covering sectors like financial services, cloud and information technology services, manufacturing, energy, gaming, life sciences, and consumer products

DuPont Fabros is a real estate investment trust (REIT) and a leading owner, developer, operator and manager of enterprise-class, carrier-neutral, large multi-tenant data centers. These data centers are cost effective and are designed to offer highly specialized, efficient, and safe computing environments. The Company operates 12 data centers in three major US markets and Canada, which total 3.5 million gross square feet and 302 megawatts of available critical load. The Company’s customer base covers national and international enterprises from sectors like technology, Internet content providers, media, communications, cloud-based, healthcare and financial services.

Last Close Stock Review

Digital Realty Trust’s share price finished yesterday’s trading session at $114.70, rising 1.22%. A total volume of 3.06 million shares have exchanged hands, which was higher than the 3-month average volume of 1.04 million shares. The Company’s stock price rallied 11.19% in the last three months, 21.75% in the past six months, and 12.10% in the previous twelve months. Additionally, the stock surged 16.73% since the start of the year. Shares of the Company have a PE ratio of 48.98 and have a dividend yield of 3.24%. The stock currently has a market cap of $18.53 billion.

At the closing bell, on Monday, June 12, 2017, DuPont Fabros Technology’s stock climbed 1.50%, ending the trading session at $61.71. A total volume of 4.95 million shares have exchanged hands, which was higher than the 3-month average volume of 818.58 thousand shares. The Company’s stock price skyrocketed 29.45% in the last three months, 45.06% in the past six months, and 35.00% in the previous twelve months. Moreover, the stock soared 40.47% since the start of the year. The stock is trading at a PE ratio of 35.08 and has a dividend yield of 3.24%. The stock currently has a market cap of $4.82 billion.

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