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Business Combinations

3 Months Ended

Mar. 31, 2020

3. Business Combinations

Interxion Combination

We obtained control of Interxion on March 9, 2020 and completed the Interxion Combination on March 12, 2020 for total equity consideration of approximately $7.0 billion, including approximately $108.5 million of assumed cash and cash equivalents. As of March 31, 2020, the estimated fair values of acquired assets and assumed liabilities were provisional estimates, based on the best information available. We have not been able to obtain all of the necessary information to complete the valuation of each of the assets and liabilities since the acquisition closed late in the quarter, consequently, more time is needed to obtain all of the source documents, obtain market data information in the various metropolitan areas, and adequately review and evaluate the information. These provisional estimates are subject to change as we complete all remaining steps in finalizing the purchase price allocation, and it is reasonably possible that there could be significant changes to the preliminary values below. We expect to finalize the valuation of all assets and liabilities by June 30, 2020.

The following table summarizes the provisional amounts for acquired assets and liabilities recorded at their fair values as of the acquisition date (in thousands):


	Provisional
	Amounts
Land	$	310,310
Building and improvements		3,003,378
Construction in progress		311,702
Land held for development		33,447
Operating lease right-of-use assets		526,399
Cash and cash equivalents		108,548
Accounts receivables		218,868
Goodwill		4,192,504
Customer relationship value		1,340,539
Revolving credit facility		(128,282)
Mortgage loans		(74,316)
Unsecured debt		(1,434,666)
Accounts payable and other accrued liabilities		(278,542)
Operating lease liabilities		(526,399)
Deferred tax liability		(595,795)
Other working capital liabilities, net		(32,443)
Total purchase price	$	6,975,252

Goodwill represents the excess of the purchase price over the fair value of net tangible and intangible assets acquired and tangible and intangible liabilities assumed in the acquisition. As shown above, we recorded approximately $4.2 billion of goodwill related to the Interxion Combination. The strategic benefits of the acquisition include the Company’s ability to continue its strategy to provide solutions on a global basis with a diversified product offering of data center solutions for both small and large footprint deployments as well as interconnection services. These factors contributed to the goodwill that was recorded upon consummation of the transaction.

The unaudited pro forma financial information set forth below is based on our historical condensed consolidated income statements for the three months ended March 31, 2020 and 2019, adjusted to give effect to the Interxion Combination as if it occurred on January 1, 2019. The pro forma adjustments primarily relate to merger expenses, depreciation expense on acquired buildings and improvements, amortization of acquired intangibles, and estimated interest expense related to financing transactions, the proceeds of which were used to fund the repayment of Interxion debt in connection with the Interxion Combination.


	Pro forma (unaudited)
	(in thousands, except per share data)
	Three Months Ended March 31,
Digital Realty Trust, Inc.	2020		2019
Total revenue	$	971,336	$	986,519
Net income available to common stockholders ⁽¹⁾	$	242,036	$	22,634
Income per share, diluted ⁽²⁾	$	0.91	$	0.09


	Pro forma (unaudited)
	(in thousands, except per unit data)
	Three Months Ended March 31,
Digital Realty Trust, L.P.	2020		2019
Total revenue	$	971,336	$	986,519
Net income available to common unitholders ⁽¹⁾	$	249,836	$	26,934
Income per unit, diluted ⁽²⁾	$	0.91	$	0.09

(1)	Pro forma net income available to common stockholders/unitholders was adjusted to exclude $52.4 million of merger related costs incurred by the Company during the three months ended March 31, 2020 and to include these charges for the corresponding period in 2019.

(2)	Adjusted to give effect to the issuance of approximately 54.3 million shares of Digital Realty Trust, Inc. common stock in the Interxion Combination.

Revenues of approximately $47.4 million and net income of approximately $2.5 million associated with the Interxion Combination are included in the condensed consolidated income statement for the three months ended March 31, 2020.