SAN FRANCISCO and WASHINGTON, June 9,
2017 /PRNewswire/ -- Digital Realty (NYSE: DLR), a leading
global provider of data center, colocation and interconnection
solutions, and DuPont Fabros (NYSE: DFT), a leading owner,
developer, operator and manager of enterprise-class,
carrier-neutral, large scale multi-tenant data centers, announced
today they have entered into a definitive agreement under which
DuPont Fabros will merge with Digital Realty in an all-stock
transaction. The consummation of the transaction is subject
to customary closing conditions, including approval by the
shareholders of Digital Realty and DuPont Fabros. Under the
terms of the agreement, DuPont Fabros shareholders will receive a
fixed exchange ratio of 0.545 Digital Realty shares per DuPont
Fabros share, for a transaction valued at approximately
$7.6 billion in enterprise value.
Transaction Delivers Key Strategic and Financial
Benefits
- Enhances Ability to Serve Top U.S. Metro Areas:
DuPont Fabros' portfolio is concentrated in top U.S. data center
metro areas across Northern
Virginia, Chicago and
Silicon Valley. The transaction will help grow Digital
Realty's presence in strategic, high-demand metro areas with strong
growth prospects, while achieving significant diversification
benefits for DuPont Fabros' shareholders from the combination with
Digital Realty's existing footprint of 145 properties across 33
global metropolitan areas.
- Expands Hyper-Scale Product Offering: DuPont
Fabros' 12 purpose-built, in-service data centers will
significantly expand Digital Realty's hyper-scale product offering
and improve its ability to meet the rapidly growing needs of cloud
and cloud-like customers, in addition to enterprise customers
undertaking the shift to a hybrid cloud architecture.
Conversely, the transaction enables DuPont Fabros to address a
broader set of customers' data center requirements, with the
addition of Digital Realty's colocation and interconnection product
offerings.
- Solidifies Blue-Chip Customer Base: DuPont Fabros'
impressive roster of blue-chip customers will further enhance the
credit quality of Digital Realty's existing customer base. On
a combined basis, investment grade or equivalent customers will
represent more than 50% of total revenue. The transaction
also significantly reduces DuPont Fabros' customer
concentration. The combined company's top three customers
will account for approximately 18% of revenue compared to 57% for
the top three customers of DuPont Fabros on a standalone
basis.
- Development Pipeline Provides External Growth
Potential: DuPont Fabros' six data center development
projects currently under construction are 48% pre-leased and
represent a total expected investment of approximately $750 million, and amount to roughly a 26%
expansion of its standalone critical load capacity. These
projects are located in Ashburn,
Chicago, Santa Clara and Toronto, all metro areas where Digital Realty
has an existing presence. These six projects are expected to
be delivered over the next 12 months, representing a solid pipeline
of future growth potential. In addition, DuPont Fabros owns
strategic land holdings in Ashburn
and Oregon, which will support the
future delivery of up to 163 megawatts of incremental capacity,
along with 56 acres of land recently acquired in Phoenix.
- Size and Scale Generate Incremental Benefits: The
two companies' operating models are highly complementary, and the
combined organization 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 U.S.-based publicly-traded data center
REIT.
- Creates Substantial Anticipated Cost Efficiencies and
Financial Benefits: The combination of the two companies
is expected to create an opportunity to realize up to $18 million of annualized overhead savings,
resulting from both companies' complementary business operations.
Upon closing, the transaction is expected to be immediately
accretive to financial metrics, and is expected to further improve
balance sheet strength.
"This strategic and complementary transaction significantly
enhances Digital Realty's ability to support the growth of
hyper-scale users in the top U.S. data center metro areas, while
providing meaningful customer and geographic diversification for
DuPont Fabros," said A. William
Stein, Digital Realty's Chief Executive Officer. "The
combination is expected to generate both operating and financial
benefits, and I'd like to congratulate Scott Peterson, Mark
Walker and their team on successfully negotiating the
largest transaction in our company's history, a combination that we
believe will enhance our ability to create significant long-term
value for both sets of shareholders."
"We are excited to deliver this compelling transaction to our
shareholders and execute upon two of the strategic objectives
embodied in our corporate vision – diversifying our customer base
and expanding our geographic presence," said Christopher P. Eldredge, DuPont Fabros'
President & Chief Executive Officer. "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. We
look forward to working closely with the Digital Realty team over
the coming months to close the transaction and bring our two
companies together."
Transaction Details
The fixed exchange ratio represents a total enterprise value of
approximately $7.6 billion, including
$1.6 billion of assumed debt and
excluding transaction costs. Digital Realty has obtained a
fully committed bridge loan facility from BofA Merrill Lynch and
Citigroup which will be available, if needed, to finance the
transaction. The debt assumed in the transaction is expected
to be permanently refinanced with a combination of investment grade
corporate bonds and other financings. The transaction has
been unanimously approved by the boards of directors of both
Digital Realty and DuPont Fabros.
The transaction is expected to close in the second half of 2017
and is subject to the approval of DuPont Fabros and Digital Realty
shareholders and other customary closing conditions.
BofA Merrill Lynch and Citigroup are acting as financial
advisors and Latham & Watkins LLP is acting as legal advisor to
Digital Realty. Goldman Sachs & Co. LLC is acting as
financial advisor and Hogan Lovells US LLP is acting as legal
advisor to DuPont Fabros.
Investor Conference Call
The company will host a conference call to discuss the
transaction at 8:30 a.m. EDT /
5:30 a.m. PDT on June 9, 2017, and a presentation has been posted
to the Investors section of the company's website at
http://investor.digitalrealty.com.
To participate in the live call, investors are invited to dial
(888) 317-6003 (for domestic callers) or (412) 317-6061 (for
international callers) and reference the conference ID# 2712372 at
least five minutes prior to start time.
The telephone replay will be available from 24 hours after the
call until July 9, 2017. The
telephone replay may be accessed by dialing (877) 344-7529 (for
domestic callers) or (412) 317-0088 (for international callers) and
providing the conference ID# 10108385.
About Digital Realty
Digital Realty supports the data center, colocation and
interconnection strategies of more than 2,300 firms across its
secure, network-rich portfolio of data centers located throughout
North America, Europe, Asia
and Australia. Digital Realty's clients include domestic and
international companies of all sizes, ranging from financial
services, cloud and information technology services, to
manufacturing, energy, gaming, life sciences and consumer
products. https://www.digitalrealty.com/
About DuPont Fabros
DuPont Fabros Technology, Inc. (NYSE: DFT) is a leading owner,
developer, operator and manager of enterprise-class,
carrier-neutral, large multi-tenant data centers. The
company's facilities are designed to offer highly specialized,
efficient and safe computing environments in a low-cost operating
model. The company's customers outsource their
mission-critical applications and include national and
international enterprises across numerous industries, such as
technology, Internet content providers, media, communications,
cloud-based, healthcare and financial services. The company's
12 data centers are located in three major U.S. metro areas and
total 3.5 million gross square feet and 301.5 megawatts of
available critical load to power the servers and computing
equipment of its customers. DuPont Fabros is a real estate
investment trust (REIT) headquartered in Washington, D.C. For more information,
please visit www.dft.com.
For Additional Information:
Andrew P. Power
Chief Financial Officer
Digital Realty
(415) 738-6500
Investor Relations:
John J. Stewart / Maria S. Lukens
Digital Realty
(415) 738-6500
investorrelations@digitalrealty.com
Jeffrey H. Foster
Chief Financial Officer
DuPont Fabros
(202) 478-2333
Media Inquiries:
John Christiansen / Scott Lindlaw / Lindsay
Andrews
Sard Verbinnen & Co
(415) 618-8750
Digital Realty-SVC@sardverb.com
Safe Harbor Statement
Additional Information and Where You Can Find It:
Digital Realty and DuPont Fabros each intend to file a proxy
statement/prospectus in connection with the merger. Investors
are urged to read carefully the applicable proxy
statement/prospectus and other relevant materials because they
contain important information about the merger. Investors may
obtain free copies of these documents and other documents filed by
Digital Realty or DuPont Fabros with the SEC through the web site
maintained by the SEC at www.sec.gov. Investors may obtain
free copies of the documents filed with the SEC by Digital Realty
by going to Digital Realty's corporate website at
www.digitalrealty.com or by directing a written request to: Digital
Realty Trust, Inc., Four Embarcadero Center, Suite 3200,
San Francisco, CA 94111,
Attention: Investor Relations. Investors may obtain free
copies of documents filed with the SEC by DuPont Fabros by going to
DuPont Fabros's corporate website at www.dft.com or by directing a
written request to: DuPont Fabros Technology, Inc., 401 9th St. NW,
Suite 600, Washington, DC 20004,
Attention: Investor Relations. Investors are urged to read
the applicable proxy statement/prospectus and the other relevant
materials before making any voting decision with respect to the
merger.
Digital Realty and its directors and executive officers and
DuPont Fabros and its directors and executive officers may be
deemed to be participants in the solicitation of proxies from the
stockholders of each of Digital Realty and DuPont Fabros in
connection with the merger. Information regarding the interests of
these directors and executive officers in the merger will be
included in the proxy statement/prospectus referred to above.
Additional information regarding certain of these persons and
their beneficial ownership of Digital Realty common stock is also
set forth in the Definitive Proxy Statement for Digital Realty's
2017 Annual Meeting of Stockholders, which has been filed with the
SEC. Additional information regarding certain of these
persons and their beneficial ownership of DuPont Fabros common
stock is set forth in the Definitive Proxy Statement for DuPont
Fabros' 2017 Annual Meeting of Stockholders, which has been filed
with the SEC.
Note Regarding Forward-Looking Statements:
This document contains forward-looking statements that involve
substantial risks and uncertainties. All statements, other
than statements of historical facts, included in this presentation
regarding strategy, future operations, future financial position,
future revenue, projected expenses, prospects, plans and objectives
of management are forward-looking statements. Examples of
such statements include, but are not limited to, statements
relating to the structure, timing and completion of the merger
between Digital Realty and DuPont Fabros; anticipated synergies and
cost efficiencies of the merger; expectations regarding the
financial performance, capitalization, resources and ownership
structure of the combined organization; Digital Realty's continued
listing on NYSE after the merger; the timing and nature of any
financing in connection with or after the merger; the nature,
strategy and focus of the combined organization; the executive and
board structure of the combined organization; and expectations
regarding voting by Digital Realty or DuPont Fabros
stockholders. Digital Realty and/or DuPont Fabros may not
actually achieve the plans, carry out the intentions or meet the
expectations or projections disclosed in any forward-looking
statements contained herein and you should not place undue reliance
on these forward-looking statements. Actual results or events
could differ materially from the plans, intentions, expectations
and projections disclosed in the forward-looking statements.
Various important factors could cause actual results or
events to differ materially from the forward-looking statements,
including the risks described in the "Risk Factors" section of
Digital Realty's and DuPont Fabros' periodic reports filed with the
SEC. Forward-looking statements do not reflect the potential
impact of any future in-licensing, collaborations, acquisitions,
mergers, dispositions, joint ventures, or investments Digital
Realty or DuPont Fabros may enter into or make. Neither
Digital Realty nor DuPont Fabros assumes any obligation to update
any forward-looking statements, except as required by law.
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SOURCE Digital Realty
