Item 7.01. Regulation FD Disclosure.
On January 3, 2022, Digital Realty issued a press release announcing the Teraco
Acquisition described under Item 8.01 below. A copy of the press release is
furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information included in this Current Report on Form 8-K under this Item 7.01
(including Exhibit 99.1) shall not be deemed "filed" for the purposes of Section
18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
otherwise subject to the liabilities of that section, nor shall it be deemed
incorporated by reference into any filing made by the company or the operating
partnership under the Exchange Act or the Securities Act of 1933, as amended
(the "Securities Act"), except as shall be expressly set forth by specific
reference in such a filing.
Item 8.01. Other Events.
Pending Teraco Acquisition
On December 22, 2021, Digital Titan Proprietary Limited, a South African
subsidiary of our operating partnership ("Digital Titan"), entered into
definitive agreements with TDE Luxco, BPESAL V2 S.a r.l, and other sellers party
thereto (collectively, the "Teraco Sellers") to acquire a majority interest
stake in TDE Investments (Pty) Ltd and its subsidiaries ("TDE Investments"),
Africa's largest carrier-neutral data center and interconnection services
provider, for consideration that we currently estimate to be approximately $1.7
billion (the "Teraco Acquisition"). The consideration values the enterprise of
TDE Investments and its subsidiaries at approximately $3.5 billion (before
contractual purchase price adjustments, transaction expenses, taxes and
potential currency fluctuations). Following the close of the Teraco Acquisition,
Digital Titan will own approximately 55% of the total economic interests in TDE
Investments and its subsidiaries, taken as a whole, with the remaining
approximately 45% of such interests to be retained by a consortium of TDE
Investments management and existing investors. The rolling equity holders in TDE
Investments will have the opportunity to put their equity interests in TDE
Investments to Digital Titan between 3.5-5.5 years following the closing of the
Teraco Acquisition, and Digital Titan will have a right to call those equity
interests between 5.5-6.5 years following the closing of the Teraco Acquisition.
The transaction is expected to be approximately 1% dilutive to our core funds
from operations per share in 2022, breakeven in 2023, and accretive to financial
metrics and the growth trajectory of the company thereafter. We expect the
investment will be financed through a combination of proceeds from our private
capital and capital recycling efforts, committed funds under an existing equity
forward commitment, and other potential future financings.
The closing of the Teraco Acquisition is subject to customary closing
conditions, including but not limited to the continuing accuracy of
representations and warranties (subject to agreed-upon materiality standards)
and material compliance with covenants in the share purchase agreement (the
"Share Purchase Agreement"). In connection with the Teraco Acquisition, our
operating partnership has agreed to guarantee to the Teraco Sellers payment in
full of the consideration and any and all costs, expenses, fees and other
amounts payable by Digital Titan under the Share Purchase Agreement.
We believe the Teraco Acquisition will immediately position Digital Realty as
the leading data center provider on the high-growth African continent. TDE
Investments is the largest and most densely interconnected data center platform
in Africa, with an in-service portfolio of seven state-of-the-art data centers
strategically located in the key South African metro areas of Johannesburg, Cape
Town and Durban. The TDE Investments portfolio is comprised of 187 megawatts of
total planned capacity, including 75 megawatts of capacity currently in-service,
19 megawatts of capacity under construction and 93 megawatts of potential future
additional capacity. TDE Investments owns the freehold to six of its seven
in-service data centers, as well as adjacent land to support the future
development pipeline. TDE Investments serves over 600 customers, including more
than 275 connectivity providers, over 25 cloud and content platforms and
approximately 300 enterprises, with approximately 22,000 cross-connects between
customers.
Cautionary Statement Regarding Forward-Looking Statements
This Current Report on Form 8-K contains certain "forward-looking" statements as
that term is defined by Section 27A of the Securities Act and Section 21E of the
Exchange Act. Statements that are predictive in nature, that depend on or relate
to future events or conditions, or that include words such as "believes",
"anticipates", "expects", "may", "will", "would", "should", "estimates",
"could", "intends", "plans" or other similar expressions are forward-looking
statements. Forward-looking statements involve significant known and unknown
risks and uncertainties that may cause the company's actual results in future
periods to differ materially from those projected or contemplated in the
forward-looking statements as a result of, but not limited to, the following
factors: timing and consummation of the Teraco Acquisition; risks and
uncertainties related to market conditions and satisfaction of customary closing
conditions related to the Teraco Acquisition; the expected operating performance
of the Teraco Acquisition and descriptions relating to these expectations; our
future plans to expand our platform in Africa; and the impact of legislative,
regulatory and competitive changes and other risk factors relating to the
industries in which we operate, as detailed from time to time in each of our
reports filed with the Securities and Exchange Commission. There can be no
assurance that the proposed transactions will be consummated on the terms
described herein or at all.
The risks included here are not exhaustive, and additional factors could
adversely affect our business and financial performance. We discussed a number
of additional material risks in our annual report on Form 10-K for the year
ended December 31, 2020 and other filings with the Securities and Exchange
Commission. Those risks continue to be relevant to our performance and financial
condition. Moreover, we operate in a very competitive and rapidly changing
environment. New risk factors emerge from time to time and it is not possible
for management to predict all such risk factors, nor can it assess the impact of
all such risk factors on the business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements. We expressly disclaim any
responsibility to update forward-looking statements, whether as a result of new
information, future events or otherwise.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
99.1 Press Release of Digital Realty dated January 3, 2022
104 Cover Page Interactive Data File (embedded within the Inline
XBRL document)]
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