Offer Would Position DLR to Compete Globally With Equinix In Financially rewarding And Growing Information Center Interconnection Business
In the most recent example of consolidation amongst data center operators and designers, private equity firms ABRY Partners and Berkshire Partners have consented to offer colocation expert Telx to San Francisco-based Digital Realty Trust (NYSE: DLR) for $1.89 billion.
The acquisition is anticipated to double Digital Realty’s footprint in the colocation and interconnection company, challenging market leader Equinix and reinforcing DLR’s capability to offer cloud-based services to clients.
The growth of cloud-based computing and the have to provide cloud services to data center consumers is driving consolidation in the data center business. In Might, Equinix revealed it would buy UK-based TelecityGroup for $3.6 billion in money and stock.
Since March 30, Telx managed 1.3 million square feet of data center space in 20 facilities throughout the united state. While six of the facilities are rented from third parties and two are owned by Telx, 12 of the data centers are rented or subleased from Digital Real estate.
The proposed acquisition highlights DLR’s method of getting complementary assets to reinforce and diversify its profile, preparing for global development, stated Digital Real estate CEO A. William Stein.
“Telx’s reputable colocation and affiliation businesses offer access to two rapidly growing sectors with enduring client relationships in top-tier metropolitan areas such as New York and Silicon Valley,” Stein stated. “That more than half of Telx’s 20 centers are run out of Digital Realty properties additionally highlights the strategic fit, as well as the potential incremental income opportunities.”
Digital Realty received a commitment from a syndicate of lenders for a $1.85 billion unsecured term loan bridge center to be made use of if essential to money a part of the acquisition. The deal is expected to close later in the year.
Fitch Ratings needed to pull back a news release prematurely validating the deal on Monday morning and reaffirming its rating and outlook for the company. Following this morning’s announcement, Fitch affirmed DLR’s issuer default bond score of BBB and preserved its steady score outlook.
BofA Merrill Lynch and Morgan Stanley are working as Digital Real estate’s monetary consultants and Latham & & Watkins LLP is serving as DLR’s legal counsel. Barclays and DH Capital are acting as monetary advisors and Kirkland & & Ellis LLP is functioning as legal counsel to ABRY Partners, Berkshire Partners and Telx.