SAN FRANCISCO, July 14, 2015 /PRNewswire/ -- Digital Realty Trust, Inc.
(NYSE: DLR), a leading global provider of data center and colocation
solutions, and Telx, a national provider of data center colocation,
interconnection and cloud enablement solutions, announced today they
have entered into a definitive agreement under which Digital Realty will
acquire Telx from private equity firms ABRY Partners and Berkshire
Partners in a transaction valued at $1.886 billion.
The combination is expected to double Digital Realty's footprint in
the rapidly-growing colocation business, as well as provide Digital
Realty customers access to a leading interconnection platform. Telx's
extensive interconnection ecosystem enables the exchange of information
between communications service providers, enterprises, content providers
and other entities with low latency and diverse connectivity across a
global network and is expected to provide Digital Realty an opportunity
for future growth. As of March 31, 2015, Telx managed 1.3 million
square feet of data center space operating out of 20 facilities across
the country, of which two are Telx-owned, 11 are leased from Digital
Realty, one is partially sub-leased from Digital Realty and an unrelated
third party, and six are leased from third parties.
"This transformative transaction is consistent with our strategy of
sourcing strategic and complementary assets to strengthen and diversify
Digital Realty's data center portfolio and expand our product mix and
presence in the attractive colocation and interconnection space," said
A. William Stein, Digital Realty's Chief Executive Officer. "Telx's
well-established colocation 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. 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. This
transaction advances our objective of ensuring that Digital Realty's
suite of products and services is able to best serve our customers'
current and future data center needs."
"We are excited to join Digital Realty and become part of a much
larger global data center services platform," said Chris Downie, Chief
Executive Officer of Telx. "We look forward to working with the Digital
Realty team to extend a broader, enhanced data center solution to our
collective customers. The combination of Telx's colocation and
interconnection capabilities with Digital Realty's expansive wholesale
platform provides greater flexibility and optionality for our customers
and creates a global solutions provider covering wholesale customer
applications and smaller performance-oriented deployments in select
high-growth urban submarkets across the U.S. As we open this new
chapter, I am proud of our team who, with the support of our partners,
ABRY and Berkshire, have significantly increased Telx's revenue and
earnings since 2011 and have positioned the company for long-term
growth."
Closing Details and Financial Impact
In connection with the definitive agreement, Digital Realty received a
commitment from a syndicate of lenders for a $1.850 billion unsecured
term loan bridge facility, the proceeds of which will be available for
use, if necessary, to fund a portion of the acquisition of Telx.
Borrowings, if any, under the bridge facility will bear interest at a
rate based, at the borrower's option, on LIBOR or a Base Rate (as
defined in the commitment papers), in each case plus an applicable
margin based on Digital Realty 's credit rating, and the facility will
mature 364 days after the closing date of the acquisition of Telx.
The transaction is expected to close later in the year and is subject
to customary closing conditions. The transaction is expected to be
accretive to 2016 financial metrics.
BofA Merrill Lynch and Morgan Stanley are serving as Digital Realty's
financial advisors and Latham & Watkins LLP is serving as Digital
Realty's legal counsel in connection with the pending acquisition.
Barclays and DH Capital are serving as financial advisors and Kirkland
& Ellis LLP is serving as legal counsel to ABRY Partners, Berkshire
Partners and Telx in connection with the pending acquisition.
Additional details about the transaction will be provided on Digital
Realty's second quarter 2015 earnings call scheduled for Thursday, July
30, 2015.
For Additional Information:
Media Inquiries
John Christiansen / Lindsay Andrews / Reze Wong
Sard Verbinnen & Co
(415) 618-8750
Investor Relations
John J. Stewart
Senior Vice President, Investor Relations
Digital Realty Trust, Inc.
(415) 738-6500
About Digital Realty
Digital Realty supports the data
center and colocation strategies of more than 600 firms across its
secure, network-rich portfolio of data centers located throughout North
America, Europe, Asia and Australia. Digital Realty's clients include
domestic and international companies of all sizes, ranging from
financial services, cloud and information technology services, to
manufacturing, energy, gaming, life sciences and consumer products.
About Telx
Telx is a data center solution provider fueling
infrastructure, interconnection and business progress. A privately held
company headquartered in New York with west coast operations out of San
Francisco, Telx serves a broad range of industries from 20 data centers
located across 13 U.S. metro areas: the New York/New Jersey metro area,
Chicago, Dallas, Los Angeles, San Francisco, Santa Clara, Seattle,
Portland, Atlanta, Miami, Phoenix and Charlotte, N.C. Telx manages 1.3
million square feet of data center space and more than 52,000 network
connections.
About Berkshire Partners LLC
Berkshire Partners, the
Boston-based investment firm, has invested in over 100 middle market
companies since 1986 through eight investment funds with aggregate
capital commitments of over $11 billion. Berkshire has developed
specific industry experience in several areas, including communications,
consumer products and retail, business services, industrial
manufacturing and transportation. Within communications, the firm has
particular expertise in infrastructure investments including Crown
Castle International (NYSE:CCI) and Lightower Fiber Networks. Berkshire
has a strong history of partnering with management teams to grow the
companies in which it invests, with the goal of consistently achieving
superior investment returns. The firm seeks to invest $50 million to
$500 million of equity capital in each portfolio company.
About ABRY Partners
Founded in 1989, ABRY Partners is a
media, communications, and business and information services focused
private equity investment firm. Since its founding, ABRY has completed
over $42 billion of transactions, representing investments in over 450
companies. The firm is currently managing over $4.3 billion of total
capital and is investing out of a $1.9 billion private equity fund, $950
million senior equity fund, and a $1.5 billion senior debt fund.
Safe Harbor Statement
This press release contains
forward-looking statements which are based on current expectations,
forecasts and assumptions that involve risks and uncertainties that
could cause actual outcomes and results to differ materially, including
statements related to the acquisition of Telx, the expected benefits
from the acquisition, expected timing for closing the acquisition and
financing plans. These risks and uncertainties include, among others,
the following: the impact of current global economic, credit and market
conditions; current local economic conditions in our geographic markets;
decreases in information technology spending, including as a result of
economic slowdowns or recession; adverse economic or real estate
developments in our industry or the industry sectors that we sell to
(including risks relating to decreasing real estate valuations and
impairment charges); our dependence upon significant tenants; bankruptcy
or insolvency of a major tenant or a significant number of smaller
tenants; defaults on or non-renewal of leases by tenants; our failure to
obtain necessary debt and equity financing; risks associated with using
debt to fund our business activities, including re-financing and
interest rate risks, our failure to repay debt when due, adverse changes
in our credit ratings or our breach of covenants or other terms
contained in our loan facilities and agreements; financial market
fluctuations; changes in foreign currency exchange rates; our inability
to manage our growth effectively; difficulty acquiring or operating
properties in foreign jurisdictions; the occurrence of any event, change
or other circumstance that would compromise our ability to complete the
acquisition of Telx within the expected timeframe or at all; our
failure to successfully integrate and operate acquired or developed
properties or businesses, including Telx; the suitability of our
properties and data center infrastructure, delays or disruptions in
connectivity, failure of our physical infrastructure or services or
availability of power; risks related to joint venture investments,
including as a result of our lack of control of such investments; delays
or unexpected costs in development of properties; decreased rental
rates, increased operating costs or increased vacancy rates; increased
competition or available supply of data center space; our inability to
successfully develop and lease new properties and development space;
difficulties in identifying properties to acquire and completing
acquisitions; our inability to acquire off-market properties; our
inability to comply with the rules and regulations applicable to
reporting companies; our failure to maintain our status as a REIT;
possible adverse changes to tax laws; restrictions on our ability to
engage in certain business activities; environmental uncertainties and
risks related to natural disasters; losses in excess of our insurance
coverage; changes in foreign laws and regulations, including those
related to taxation and real estate ownership and operation; and changes
in local, state and federal regulatory requirements, including changes
in real estate and zoning laws and increases in real property tax
rates. For a further list and description of such risks and
uncertainties, see the reports and other filings by the company with the
U.S. Securities and Exchange Commission, including the company's Annual
Report on Form 10-K for the year ended December 31, 2014 and Quarterly
Report on Form 10-Q for the quarter ended March 31, 2015. The company
disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
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SOURCE Digital Realty Trust, Inc.