Digital Realty Trust announces merger with DuPont Fabros

  • Digital Realty Soverign House data centre

Interesting to see today that Digital Realty Trust (DRT) has announced a merger with US focused competitor DuPont Fabros (DFT). DFT shareholders will receive .545 DRT shares worth $63.22 at last night’s closing prices and a 14% premium to DFT’s own closing price. DRT stock market capitalisation was $18bn whereas DFT is only $4.4bn (at last night’s close).

Key drivers, according to the DRT press release are to “expand DRT’s hyper-scale” product offering and, interestingly, add DRT’s growing retail colocation product set to DFT’s hitherto wholesale only focus.

Hyper-scale cloud demand from the big four or five global operators has had a significant impact on the London data centre market over 2016 and thus far into 2017, as has the continuing wave in corporate activity. DFT don’t have any operations in Europe, so this transaction is unlikely to have much impact on the market here, but the trends of hyper-scale demand and continuing corporate activity will do. Indeed I attended the Datacloud Cloud Congress in Monaco this week and it was fascinating to hear Chris Kenney, SVP International at Digital Realty describe the market as being in an “extreme secular growth phase”, which would appear to sum things up neatly.

Corporate activity driving the market

My recent report on the London retail colocation market explains what’s behind both the surge in corporate activity in the data centre market these past two years as well as what this means for retail colocation pricing trends. So called hyper-scale demand has also altered the mix of wholesale operators who were previously focusing on the retail market, but of course DRT, since their purchase of the former eight Telecity sites across Europe are now firmly committed to the retail market here and perhaps enjoying their role as a new third pan-European alternative option in the market.

The report also includes two pages on each of the 60 colocation facilities we cover on Colo-X in the London market. Full details of the report can be found on the Colo-X website via this link

(I’ve used the picture of former Telecity Sovereign House as one of the eight sites now being run by DRT).