Digital Realty Trust, Inc. (NYSE:DLR) entered into a definitive agreement to acquire 55% equity interest in Teraco Data Environments (Pty) Ltd. from Permira Advisers Ltd., Berkshire Partners LLC, Tde Luxco, BPESAL V2 S.a r.l and others for $1.7 billion on December 22, 2021. The Teraco investment will be financed through a combination of proceeds from Digital Realty's private capital and capital recycling initiatives, committed funding under the existing forward equity commitment and other potential future financings. After closing, Digital Realty will own approximately 55% of the total equity interests in Teraco, while the remaining 45% will be held by a consortium of existing investors, including management, Berkshire Partners LLC, Permira, van Rooyen Group, Columbia Capital, Stepstone Ventures and the Teraco Connect Trust. The rolling equity investors in Teraco will have the opportunity to put their interests to Digital Realty between 3.5-5.5 years after closing, while Digital Realty will have the right to call those equity interests between 5.5-6.5 years after closing. The Teraco management team will remain in place and will maintain day-to-day responsibility for operations in South Africa. The Teraco management team is led by Chief Executive Officer Jan Hnizdo. The closing of the 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), material compliance with covenants in the share purchase agreement and South African regulatory approvals. As of April 19, 2022, the Competition Commission has given conditional approval to the acquisition of Teraco Data Environments. As of July 20, 2022, The Competition Tribunal of South Africa has approved the transaction with conditions.
The transaction is expected to close in the first half of 2022. The transaction is expected to be approximately 1% dilutive to Digital Realty's core FFO per share in 2022, breakeven in 2023, and accretive to financial metrics and the growth trajectory of the combined organization thereafter. The Goldman Sachs Group, Inc. (NYSE:GS) acted as financial advisor and Weil, Gotshal & Manges LLP and Edward Nathan Sonnenbergs Inc. acted as legal advisors to Teraco. Solomon Partners acted as financial advisor and Latham & Watkins LLP and Bowmans acted as legal advisors to Digital Realty. Morgan Stanley acted as financial advisor Berkshire Partners LLC.
Digital Realty Trust, Inc. (NYSE:DLR) completed the acquisition of a 55% stake in Teraco Data Environments (Pty) Ltd from Permira Advisers Ltd., Berkshire Partners LLC, Tde Luxco, BPESAL V2 S.a r.l and others on August 1, 2022.