Digital Realty To Buy 8 Premium European Data Centers From Equinix For $874 Mln

(RTTNews) - Digital Realty Trust, Inc. (DLR), a provider of data center, colocation and interconnection solutions, announced that it has entered into a definitive agreement to acquire a portfolio of eight high-quality, carrier-neutral data centers in Europe, five in London, two in Amsterdam and one in Frankfurt, from Equinix. The total purchase price is approximately $874 million, before fees, closing costs and prorations.

Digital Realty noted that it will acquire a fee interest in one data center in Amsterdam and will acquire leasehold interests in the other seven data centers, with a weighted-average remaining lease term of approximately 23 years, including the exercise of contractual extension options. In addition, several of the leased facilities are entitled to statutory rights that give the tenant the ability to renew upon lease expiration, subject to certain exceptions.

In connection with this transaction, Digital Realty has granted Equinix an option to acquire the company's facility at 114 rue Ambroise Croizat in Paris and its associated business, for a purchase price of approximately $215 million, before closing costs and prorations. Digital Realty cannot assure when, or if, the option will be exercised.

The European portfolio acquisition is expected to close in the second half of 2016 and is subject to customary closing conditions, including approval by the European Commission, as well as completion of the works council consultation process in the Netherlands. Equinix's divesture of the eight assets is a condition of the European Commission's approval of Equinix's acquisition of Telecity, which closed in January 2016.

separately, Digital Realty Trust announced that it has commenced an underwritten registered public offering of 11.50 million shares of its common stock in connection with the forward sales agreements. The forward purchasers are expected to grant the underwriters a 30-day option to purchase up to an additional 1.725 million shares of the company's common stock.

In a separate press release, Equinix confirmed that it has reached an agreement to divest eight assets in its European business to Digital Realty Trust, Inc. for the amount of $874.4 million.

As a condition of obtaining clearance from the European Commission in November 2015 for Equinix's acquisition of TelecityGroup plc, Equinix selected and agreed to divest the following facilities: TelecityGroup's Bonnington House, Sovereign House, Meridian Gate and Oliver's Yard data centers and Equinix's West Drayton data center in London; TelecityGroup's Science Park and Amstel Business Park I in Amsterdam; and TelecityGroup's Lyonerstrasse data center in Frankfurt.

The agreement is subject to certain customary closing conditions, including approval by the European Commission, as well as completion of the works council consultation process in the Netherlands. Upon approval by the European Commission, and satisfaction of the other conditions, the transaction is expected to close in third-quarter.

Additionally, Equinix has separately negotiated with Digital Realty a binding option for Equinix to acquire Digital Realty's operating business including its real estate and facility in St. Denis, Paris where Equinix has an established presence with its PA2 and PA3 International Business Exchange (IBX) data centers. The acquisition is expected to complete in the second half of 2016.