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Digital Realty completed its acquisition of Telx on October 9, 2015, paying approximately $1.886 billion in cash, subject to adjustments under the merger agreement. The deal added Telx’s colocation and interconnection business to Digital Realty’s larger data-center platform. The figures describing Telx’s sites, customers and connections below are historical transaction disclosures, not current operating data.
When did Digital Realty acquire Telx?
Digital Realty announced a definitive agreement to acquire Telx on July 14, 2015. The merger agreement provided for Digital Delta, Inc., a Digital Realty subsidiary, to merge into Telx, with Telx surviving the merger. Digital Realty’s SEC filing says the acquisition closed on October 9, 2015. The company issued a separate completion announcement on October 12, describing Telx as its colocation and connectivity line of business.
How much did Digital Realty pay for Telx?
The disclosed purchase price was approximately $1.886 billion, paid in cash and subject to certain adjustments under the merger agreement. Digital Realty’s closing filing identifies proceeds from preferred stock, debt notes and settlement of forward common-stock sales as funding sources. Digital Realty’s October 9, 2015 SEC closing filing is the primary source for the closing date and consideration.
What did Telx bring to Digital Realty?
Telx provided colocation, interconnection and cloud-enablement services. Colocation gives customers space and infrastructure in a data center; interconnection lets them establish direct connections to other tenants and service providers. In Telx’s case, its primary interconnection service was the cross-connect, a physical link used to exchange data or access internet, telecommunications, cloud and IT services, distribute digital media, or reach customers and locations.
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Telx’s transaction-era footprint
In its July 2015 acquisition announcement, Digital Realty described Telx as operating 20 facilities in 13 North American metropolitan areas. The transaction disclosure reported approximately 1.3 million gross square feet, more than 1,250 customers and more than 52,000 interconnections as of March 31, 2015. The named markets included New York/New Jersey, Chicago, Dallas, Los Angeles, San Francisco, Santa Clara, Seattle, Portland, Atlanta, Miami, Phoenix and Charlotte. These are figures and locations reported around the 2015 transaction, not a statement of Telx’s current footprint.
Revenue mix reported during due diligence
According to information provided by Telx’s sellers during Digital Realty’s due diligence, approximately 50% of Telx’s recurring revenue for the three months ended March 31, 2015 came from colocation and approximately 50% from interconnection. The same disclosure said recurring monthly fees for those services represented approximately 97% of total revenue for that quarter. These are period-specific seller-supplied figures, not later or current results.
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Digital Realty’s July 14, 2015 SEC transaction disclosure describes Telx’s services and the historical operating metrics.
Why did Digital Realty buy Telx?
Digital Realty presented the acquisition as a way to combine its large-footprint, wholesale data-center business with Telx’s more network-centric colocation and interconnection platform. The intended strategic benefits were a broader product mix, access to more customer needs and opportunities to extend Telx’s model through Digital Realty’s property footprint. Digital Realty also said more than half of Telx’s 20 facilities already operated in Digital Realty properties, which it viewed as a strategic fit and potential source of incremental revenue.
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Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What happened to Telx after the acquisition?
The completion announcement said Telx would operate as Digital Realty’s colocation and connectivity line of business. The cited transaction materials establish that 2015 arrangement, but they do not establish Telx’s present-day brand or legal-entity status, current facilities, services or customer base. Digital Realty’s October 12, 2015 completion announcement describes the company’s plans at closing.
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