06/09/17 Five 9s Digital Knowledge

Digital Realty Trust to buy Dupont Fabros for $7.6B

Digital Realty Trust (NYSE: DLR) announced the acquisition of competing data center REIT, Dupont Fabros (NYSE: DFT), for $7.6 billion. Dupont Fabros has 12 data centers including two recently announced data centers being developed in Toronto and Phoenix. Dupont Fabros has significant presence in 3 major data center markets including Northern Virginia, Chicago and Silicon Valley.

Digital Realty Trust operates 145 data centers internationally and one of the largest data center REITs. The acquisition will add a large cloud company tenant base to the Digital Realty Trust portfolio as Dupont Fabros has been successful in leasing large swaths of wholesale data center space to the hyperscale cloud providers such as Microsoft, Facebook, and others.

Dupont Fabros is the only pure-play wholesale data center REIT while the other large data center operators have made significant efforts to provide additional services to their customer and tenant base including retail colocation, managed services and cloud solutions. Digital Realty's acquisition of Telx for $1.9 billion in 2015 was evidence of their desire to get further into the retail colocation and interconnection business.

The Digital Realty acquisition of Dupont Fabros is the largest deal in the industry. Based upon the current terms, the offer is worth approximately $63 per share which is about a 15% premium over Dupont's share closing price. The deal is expected to close in the 2nd half of 2017.