US data centre operator Digital Realty (NYSE: DLR) has agreed to buy smaller player Telx from private equity firms ABRY Partners and Berkshire Partners in a US$1.89bn deal.
San Francisco-based Digital Realty said it expects the acquisition to double…
US data centre operator Digital Realty (NYSE: DLR) has agreed to buy smaller player Telx from private equity firms ABRY Partners and Berkshire Partners in a US$1.89bn deal.
San Francisco-based Digital Realty said it expects the acquisition to double its footprint in the co-location space and grant its customers access to “a leading interconnection platform”.
As of 31 March, New York-based Telx managed 1.3 million square feet of data centre space operating out of 20 facilities in 13 US metro areas. Telx owns two of these facilities, 12 are leased, or partly leased, from Digital Realty and six are leased from third parties.
BofA Merrill Lynch and Morgan Stanley are Digital Realty’s financial advisors on the deal, while Latham & Watkins is providing legal counsel.
Barclays and DH Capital are financial advisors to ABRY, Berkshire and Telx, and Kirkland & Ellis is serving as legal counsel.
Digital Realty has received a commitment from a syndicate of lenders for a US$1.85bn unsecured term loan bridge facility to help fund the purchase, if needed. This facility will mature 364 days after the Telx acquisition closes, which Digital Realty expects to happen later this year. The transaction, which is subject to customary closing conditions, is expected to be accretive to 2016 financial metrics.
Digital Realty CEO William Stein said the deal aligns with the company’s strategy of sourcing assets to strengthen and diversify its data centre portfolio and expand its product range and presence in the co-location and interconnection sectors.
“Telx’s well-established co-location and interconnection businesses provide access to two rapidly-growing segments with long-standing customer relationships in top-tier metropolitan areas such as New York and Silicon Valley,” he said.
“The fact that more than half of Telx’s 20 facilities are run out of Digital Realty properties further highlights the strategic fit as well as the potential incremental revenue opportunities we expect to be able to pursue as one company on a global basis.”
Digital Realty says it supports the data centre and colocation strategies of more than 600 firms across its data centres in North America, Europe, Asia and Australia.
This marks the latest consolidation deal in the data centre sector. In May, Redwood City-based Equinix (NASDAQ: EQIX), the world’s largest co-location provider in terms of market value, agreed to pay £2.35bn (US$3.6bn) to acquire UK-based Interxion (NYSE: INXN).
