By Arunima Banerjee
(Reuters) - Digital Realty Trust Inc (N:DLR) said it would buy fellow data center operator DuPont (NYSE:DD) Fabros Technology Inc (N:DFT) for an enterprise value of about $7.6 billion, its biggest-ever deal, to help expand in high-demand markets in the United States amid a rapid shift to the cloud by technology companies.
DuPont Fabros's shares rose as much as 14.6 percent to hit a record high of $63.46, just below the offer price of $63.60 based on Thursday's close.
Washington-based DuPont Fabros operates 12 data centers in three major U.S. markets, including Silicon Valley and Northern Virginia, while Digital Realty operates 145 data centers globally.
Digital Realty and DuPont Fabros, which rent out space that companies use for data centers, have also benefited from the surge in demand for data and video.
The combined company would be the "home to the cloud," Digital Realty Chief Executive William Stein said on a conference call on Friday.
The deal, which would add companies such as Facebook Inc (O:FB) and Yahoo Inc (O:YHOO) to Digital Realty's customer base, is expected to close in the second half.
DuPont Fabros shareholders will receive a fixed exchange ratio of 0.545 Digital Realty shares per share held, the companies said.
Based on Digital Realty's Thursday close, the offer is worth $63.60 per share, a premium of 14.9 percent to DuPont Fabros's close. The implied price per share is $64.32, according to a Digital Realty presentation.
The equity value of the deal is about $4.95 billion based on DuPont Fabros's 77.8 million shares outstanding as of April 2, according to Thomson Reuters data.
"The addition of (DuPont Fabros) should enhance (Digital Realty's) growth prospects, as it's acquiring an asset that's growing at plus 10 percent per year, with recent momentum including a 28.8 MW lease signed by who we believe to be (Apple (NASDAQ:AAPL))," Wells Fargo (NYSE:WFC) analyst Jennifer Fritzsche wrote in a client note.
The deal has the potential to realize up to $18 million of annualized overhead savings, the companies said.
San Francisco, California-based Digital Realty has been acquiring companies to boost growth.
The company said in May last year that it would buy eight data centers from Equinix Inc (O:EQIX) and in October 2015 bought Telx Group Inc.
Digital Realty said it had a fully committed bridge loan facility from BofA Merrill Lynch and Citigroup (NYSE:C) to finance the DuPont Fabros deal.
BofA Merrill Lynch and Citigroup are Digital Realty's financial advisers while Goldman Sachs (NYSE:GS) is advising DuPont Fabros.
DuPont Fabros's shares were up 12 percent in morning trading, while Digital Realty's stock was little changed at $116.77.