After a month of rumours Digital Realty Trust bought US data centre colo and telecoms hub provider Telx for $1.866bn.
Digital Realty will acquire Telx from private equity firms ABRY Partners and Berkshire Partners.
The move doubles Digital Realty’s footprint in the rapidly-growing colocation business.
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, it said.
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, the company said in a statement.
As of March 31, 2015, Telx managed 1.3 million square feet of data center space operating out of 20 facilities across the US. 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."
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"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."
The transaction is expected to close later in the year.
