(Bloomberg) -- Digital Realty Trust Inc. agreed to buy DuPont Fabros Technology Inc. for about $4.95 billion in stock, a deal that would add to its data-center properties in areas such as California’s Silicon Valley.

Investors in Washington-based DuPont Fabros will get 0.545 Digital Realty shares for each of their shares, the real estate investment trusts said in a statement Friday. That values DuPont Fabros stock at $63.63 a share, about 15 percent more than Thursday’s closing price. The companies said the transaction has an enterprise value of $7.6 billion, including $1.6 billion of debt.

The deal would allow San Francisco-based Digital Realty to grow in top markets such as northern Virginia, Chicago and Silicon Valley. The combined company would be the largest wholesale data-center REIT in the U.S., analysts at KeyBank Capital Markets said in a note to clients. The transaction would be a boon for the entire sector, reducing competition and helping balance price control, the analysts wrote.

Acquiring DuPont Fabros’ purpose-built data centers “will significantly expand Digital Realty’s hyper-scale product offering and improve its ability to meet the rapidly growing needs of cloud and cloud-like customers,” Digital Realty said in the statement. DuPont Fabros also has six data-center projects under construction that are 48 percent pre-leased.

DuPont Fabros shares jumped 13 percent to $62.55 at 10:17 a.m. New York time. Digital Realty slipped 0.9 percent to $115.73.

The companies said the deal would allow them to save as much as $18 million in costs a year. The combined entity is expected to have the highest earnings before interest, taxes, depreciation and amortization -- a measure of profitability -- of any U.S.-based publicly traded data center REIT, according to the statement.

The transaction, expected to close in the second half of the year, is subject to shareholder approval.

--With assistance from Amy Thomson and Andrew Blackman

Register or login for access to this item and much more

All Information Management content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access