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Digital Realty & Interxion to undergo $8.4b mega merger

30 Oct 2019
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Digital Realty and Interxion have announced a mega-merger that will bring both businesses under a single global provider of data center, colocation, and interconnection solutions.

The US$8.4 billion deal will pull together ‘connected communities of interest’ worldwide, expanding Digital Realty’s hyperscale development.

The combined company will be uniquely positioned to meet the growing global demand from cloud platforms, service providers and enterprises seeking colocation, hybrid cloud and hyperscale data center solutions as IT architectures are re-engineered to support the explosive growth of data in modern business models.

Digital Realty CEO A. William Stein will serve as CEO of the combined company.  Interxion CEO David Ruberg will serve as the chief executive of the combined company's Europe, Middle East & Africa (EMEA) business, which will be branded "Interxion, a Digital Realty company" at the close of the transaction.

A key part of the merger will be to boost product and carrier offerings across Interxion’s current European business, which includes 53 carrier- and cloud-neutral facilities in 11 European countries and 13 metro areas including Frankfurt, Amsterdam, Paris and Interxion's Internet Gateway in Marseille. Digital Realty has an established presence in London and Dublin.

Digital Realty CEO A. William Stein says the transaction builds on Digital Realty’s foundation of serving market demand for colocation, scale and hyperscale requirements in the Americas, EMEA and Asia Pacific.

“[It] leverages Interxion's European colocation and interconnection expertise, enhancing the combined company's capabilities to enable customers to solve for the full spectrum of data center requirements across a global platform.”

"The transaction is expected to be accretive to the long-term growth trajectory of the combined organization, and to establish a global platform that we believe will significantly enhance our ability to create long-term value for customers, shareholders and employees of both companies."

Furthermore, Interxion has a pipeline of data center development projects currently under construction, with more $400 million invested to date and a total expected investment of approximately $1 billion.

According to the company, these projects represent roughly a 40% expansion of Interxion's standalone critical load capacity, are significantly pre-leased and are expected to be delivered over the next 24 months. This could solidify future growth for the combined company.

"We are excited to deliver this compelling opportunity for all our stakeholders while bolstering our ability to offer a truly global platform to serve our customers' needs," says Interxion CEO David Ruberg. 

"As part of Digital Realty, stakeholders will have the opportunity to continue to reap the benefits of the value that we have created via the communities of interest approach in our carrier- and cloud-neutral European data center portfolio. “

“They will also be able to participate in the value created by extending our approach across Digital Realty's global footprint, complementary customer base and significant presence in the Americas, EMEA and Asia Pacific.  We also believe our stakeholders will benefit from Digital Realty's investment grade balance sheet and lower cost of capital.  We look forward to working closely with Bill Stein and the entire Digital Realty team to consummate the transaction and combine the best of our companies to build the world's preeminent data center provider."

Interxion shareholders will receive a fixed exchange ratio of 0.7067 Digital Realty shares per Interxion share.  The transaction values Interxion at approximately $93.48 per ordinary share or approximately $8.4 billion of total enterprise value, including assumed net debt. 

Completion of the transaction is subject to customary closing conditions, including approval by shareholders of Interxion and shareholders of Digital Realty.