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.