Digital Realty Trust Inc to buy DuPont Fabros Technology Inc for about $7.6 billion

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Digital Realty Trust Inc said it would buy fellow data center operator DuPont Fabros Technology Inc for an enterprise value of about $7.6 billion, its biggest-ever deal, to help expand in high-demand markets in the United States amid a rapid shift to the cloud by technology companies.

Washington-based DuPont Fabros operates 12 data centers in three major U.S. markets, including the Silicon Valley and Northern Virginia, while Digital Realty operates 145 data centers globally, reports Reuters.

Digital Realty and DuPont Fabros, which rent out space that companies use for data centers, have also benefited from the surge in demand for data and video.

The deal would add companies such as Facebook Inc and Yahoo Inc to Digital Realty’s customer base, the company said on Friday.

DuPont Fabros shareholders will receive a fixed exchange ratio of 0.545 Digital Realty shares per share held, the companies said.

Based on Digital Realty’s Thursday close, the offer is worth $63.60 per share, a premium of 14.9 percent to DuPont Fabros’ close.

DuPont Fabros’s shares were up 15.3 percent at $63.85 premarket trading, while Digital Realty’s shares were up 2.4 percent at $119.50. The implied price per share was $64.32, according to a Digital Realty’s presentation.

The equity value of the deal is about $4.95 billion based on DuPont Fabros’s 77.8 million shares outstanding as of April 2, according to Thomson Reuters data.

The deal, which is expected to close in the second half of this year, has the potential to realize up to $18 million of annualized overhead savings, the company said.

Digital Realty shareholders would own about 77 percent of the combined company, with the rest owned by DuPont Fabros shareholders. San Francisco, California-based Digital Realty has been buying companies to boost growth.

The company said in May last year that it would buy eight data centers from Equinix Inc and in October 2015 bought Telx Group Inc.

Digital Realty said it had a fully committed bridge loan facility from BofA Merrill Lynch and Citigroup to finance the DuPont Fabros deal.

BofA Merrill Lynch and Citigroup are Digital Realty’s financial advisers while Goldman Sachs & Co LLC is advising DuPont Fabros.

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