The Stack Archive News Article

Digital Realty to buy DuPont Fabros in U.S. expansion

Mon 12 Jun 2017

Digital Realty data centre

Digital Realty, the international data centre operator, is set to buy fellow colocation provider DuPont Fabros for an estimated $7.6 billion (approx. £6 billion).

The deal is the largest-ever made by Digital Realty and comes as the data centre giant looks to expand further into high-demand markets in the U.S., answering to demand from companies increasingly looking to adopt and accelerate cloud strategies.

On the announcement, DuPont Fabros shares rose by almost 15%, hitting a record high of $63.46 – just slightly below the offer price of $63.60.

Washington-based DuPont Fabros owns 12 data centres across three U.S. tech hubs, including Silicon Valley and North Virginia. Digital Realty operates 145 data centres worldwide.

Speaking on the merger, Digital Realty CEO William Stein said that the combined portfolio would become the ‘home to the cloud.’

The deal, which is expected to close before the end of the year, would add tech giants Facebook and Yahoo to Digital Realty’s customer base.

“The addition of [DuPont Fabros] should enhance [Digital Realty’s] growth prospects, as it’s acquiring an asset that’s growing at plus 10 percent per year, with recent momentum including a 28.8 MW lease signed by who we believe to be [Apple],” noted Jennifer Fritzsche, a Wells Fargo analyst.

The companies suggested that the merger could generate up to $18 million of overhead savings every year.

California-based Digital Realty has been making recent steps to boost its growth strategy. In March earlier this year, the company announced plans to expand its Atlanta data centre offerings with a new facility, representing a $22 million investment.

The new Atlanta facility will comprise 18,000 square feet of raised floor space and is located close to the firm’s primary Atlanta data centre campus. The two centres will communicate via a high-speed fibre connection.

In July last year, the company also acquired eight European data centre assets from American operator Equinix for a reported $874 million.

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