Digital Realty has announced they have completed their previously announced merger in an all-stock transaction with an enterprise value of approximately $7.8 billion.
The addition of DuPont Fabros' high-quality, purpose-built data center portfolio to Digital Realty's existing footprint enhances the combined company's ability to serve its customers in the top U.S. data center metro areas. The merger also provides meaningful customer and geographic diversification for DuPont Fabros shareholders from the combination with Digital Realty's global platform.
"This highly strategic and complementary transaction further expands our product offering, and solidifies our blue-chip customer base," said A. William Stein, Digital Realty's chief executive officer. "This deal is consistent with our investment criteria, and is likewise consistent with our strategy of offering our customers the most comprehensive set of data center solutions, from single-cabinet colocation and interconnection, all the way up to multi-megawatt hyper-scale deployments."
In conjunction with the merger closing, Digital Realty appointed former DuPont Fabros Board members Michael A. Coke and John T. Roberts, Jr. to Digital Realty's Board of Directors. Mr. Coke is a highly respected real estate executive, having co-founded Terreno Realty Corporation, a publicly traded U.S. industrial REIT, where he serves as President and as a member of the Board of Directors. Previously, he served as chief financial officer and executive vice president for AMB Property Corporation, a global developer and owner of industrial real estate focused on major hub and gateway distribution markets. Mr. Roberts is also a veteran real estate investor, having held various positions at AMB Property Corporation, including president of AMB Capital Partners LLC, a subsidiary of AMB Property Corporation responsible for AMB's global private capital ventures.
Digital Realty also announced today the early tender results for, and the early settlement of, the previously announced tender offer and consent solicitation for the existing 5.875% senior notes due 2021 issued by DuPont Fabros Technology, L.P.
As of 5:00 p.m. EDT on September 13, 2017, holders of approximately $475 million had validly tendered and delivered their notes and the related consents, which represents approximately 79% of the $600 million aggregate principal amount outstanding. The withdrawal deadline also expired at 5:00 p.m. EDT on September 13, 2017. As a result, notes tendered pursuant to the tender offer can no longer be withdrawn.
The issuer exercised its right to accept and to purchase and pay for the early tender notes. Settlement occurred earlier today, September 14, 2017, immediately following the consummation of the merger. The total consideration paid for each $1,000 principal amount of early tender notes was $1,032.50 (including a $30.00 consent payment), plus accrued and unpaid interest from June 15, 2017 up to, but not including, September 14, 2017.
Having received the requisite consents from the holders of the notes in the tender offer, the issuer and U.S. Bank National Association, as trustee, executed a supplemental indenture amending the indenture relating to the notes. The supplemental indenture eliminates substantially all the restrictive covenants, certain events of default and related provisions contained in the indenture and reduces the notice periods required for redemption of the notes as described in the offer to purchase.
The tender offer will expire at 11:59 p.m. EDT on September 27, 2017 unless extended or terminated earlier by the offeror in its sole discretion. Holders who validly tender their notes after the consent payment deadline, but at or prior to expiration of the tender offer, and whose notes are accepted for purchase, will only be eligible to receive $1,002.50 per $1,000 principal amount of notes tendered, plus accrued and unpaid interest from and including the most recent interest payment date, and up to, but not including the final settlement date, which is expected to be the business day following the expiration of the tender offer. The complete terms and conditions of the tender offer are set forth in the offer documents that were previously sent to holders of the notes.
Immediately following settlement of the purchase of the early tender notes, the issuer issued a notice of redemption for the remaining outstanding principal amount. On September 18, 2017, the issuer expects to redeem the remaining outstanding principal amount at a redemption price equal to 102.938% of the aggregate principal amount of the notes to be redeemed, plus accrued and unpaid interest up to, but excluding, the redemption date. Holders of the notes may still participate in the tender offer and tender their notes at or prior to the expiration date, even though the issuer has elected to call the remaining outstanding notes for redemption.
On September 14, 2017, the issuer also issued redemption notices for the 5.625% senior notes due 2023 issued by DuPont Fabros Technology, L.P. On October 16, 2017, the issuer expects to redeem 35% of the notes due 2023 at a redemption price equal to 105.625% of the aggregate principal amount of the notes to be redeemed, plus accrued and unpaid interest up to, but excluding, the redemption date. On October 17, 2017, the issuer expects to redeem the remaining outstanding principal amount of notes due 2023 at a redemption price equal to 100.000% of the aggregate principal amount of the notes to be redeemed, plus a make-whole premium and accrued and unpaid interest up to, but excluding, the redemption date.