Digital Realty Agrees to Buy DuPont Fabros in $7.6 Billion Deal

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(Bloomberg) — Digital Realty Trust Inc. agreed to buy real estate investment trust DuPont Fabros Technology Inc. in an all-stock deal valued at about $7.6 billion including debt. The acquisition will bolster its data-center properties in Silicon Valley.Investors in the Washington-based REIT will get 0.545 Digital Realty shares for each stock they hold, the companies said in a statement on Friday. That values each DuPont Fabros share at $63.63, about 15 percent more than Thursday’s closing price.

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DuPoint Fabros has data centers in California, Virginia and Chicago and the two companies expect the combination to help meet cloud-storage needs for customers, they said in the statement. The merger would allow the companies to save as much as $18 million in costs a year and is expected to be immediately accretive on closing.

“The transaction will help grow Digital Realty’s presence in strategic, high-demand metro areas with strong growth prospects, while achieving significant diversification benefits for DuPont Fabros’ shareholders,” the companies said. Dupont Fabros is expanding in cities including Toronto and Santa Clara, California.

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The combined company is expected to have the highest EBITDA margin, a measure of profitability, of any U.S.-based publicly-traded data center REIT, according to the statement. The transaction, expected to close in the second half, is subject to shareholder approval.

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