In a step to further strengthen its market position in Europe, Digital Realty has agreed to acquire Interxion in an all-stock deal with an estimated value of $8.4 billion. Digital Realty, the largest data center landlord in the world, will pay $93.48 per share of Interxion (INXN), an Amsterdam-based provider of colocation and interconnection services.
The deal is the largest acquisition in the history of the data center industry, surpassing Digital Realty’s $7.6 billion purchase of DuPont Fabros Technology. The announcement ends weeks of speculation over the fate of Interxion, which had been rumored to be weighing takeover approaches from investment firms including KKR, Blackstone and Digital Colony.
With more than 200 facilities across 35 global markets, Digital Realty is the world’s largest operator of mission-critical facilities. After building the largest presence in the U.S. data center market, Digital Realty has accelerated its growth in international markets. Europe is the most strategically important of these global markets, and buying Interxion offers an efficient way to dramatically expand Digital Realty’s presence in both colocation and interconnection.
Interxion operates entirely in Europe, where it operates 53 carrier-neutral data centers in 11 European countries and 13 metro areas, including Frankfurt, Amsterdam, Paris and a growing Internet hub in Marseille, a key gateway to growth markets in Africa and the Middle East.
“This strategic and complementary transaction builds upon Digital Realty’s established foundation of serving market demand for colocation, scale and hyperscale requirements in the Americas, EMEA and Asia Pacific,” said Digital Realty CEO William Stein, who said the deal will “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.”
Under the terms of the agreement, Interxion shareholders will receive a fixed exchange ratio of 0.7067 Digital Realty shares per Interxion share, valuing Interxion at approximately $93.48 a share. Digital Realty will also assume Interxion’s debt, leading to a total enterprise value of $8.4 billion.
Stein will serve as CEO of the combined company, while 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. Ruberg is expected to transition out of that role within a year.
Ruberg called the deal a “compelling opportunity” for Interxion shareholders. “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. 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.”
Buying Interxion provides an immediate expansion of Digital Realty’s European footprint, but also the ability to add substantial additional capacity in key markets over the next two years. Interxion has a robust pipeline of data center development projects, with over $400 million invested to date and a total expected investment of approximately $1 billion. “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, representing a solid pipeline of potential future growth for the combined company,” Digital Realty said in its announcement. “In addition, the combined platform will maintain strategic land holdings in key growth metros across Europe, providing the potential for significant long-term development value creation.”
The transaction has been approved by the boards of directors of both Digital Realty and Interxion. The transaction is expected to close in 2020 and is subject to the approval of Interxion and Digital Realty shareholders and other customary closing conditions.
