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Business Combinations
9 Months Ended
Sep. 30, 2020
Business Combinations  
Business Combinations

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.

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

    

Final

Amounts

Land

$

159,467

Building and improvements

3,246,522

Construction in progress

273,590

Land held for development

33,447

Operating lease right-of-use assets

556,865

Cash and cash equivalents

 

108,548

Accounts receivables

218,868

Goodwill

 

4,443,856

Customer relationship value (1)

 

1,001,568

Other intangibles

44,943

Revolving credit facility

(130,327)

Mortgage loans

 

(74,316)

Unsecured debt

 

(1,457,635)

Accounts payable and other accrued liabilities

(230,585)

Finance lease obligations

(47,957)

Operating lease liabilities

 

(556,865)

Deferred tax liability, net

(535,990)

Other working capital liabilities, net

(68,947)

Total purchase price

$

6,985,052

(1)The weighted average amortization life for customer relationship value is 20 years.

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 $4.4 billion of goodwill related to the Interxion Combination. The goodwill is not expected to be deductible for local tax purposes. 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 and nine months ended September 30, 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)

Three Months Ended September 30, 

 

Nine Months Ended September 30, 

Digital Realty Trust, Inc.

    

2020

    

2019

 

2020

    

2019

Total revenue

$

1,024,668

$

983,685

$

2,988,999

$

2,949,084

Net (loss) income available to common stockholders (1)

$

(32,236)

$

55,067

$

279,712

$

114,263

Pro forma (unaudited)

(in thousands)

Three Months Ended September 30, 

 

Nine Months Ended September 30, 

Digital Realty Trust, L.P.

    

2020

    

2019

 

2020

    

2019

Total revenue

$

1,024,668

$

983,685

$

2,988,999

$

2,949,084

Net income available to common unitholders (1)

$

(33,236)

$

57,367

$

287,912

$

122,263

(1)Pro forma net (loss) income available to common stockholders/unitholders was adjusted to exclude $5.1 million and $65.7 million of merger-related costs incurred by the Company during the three and nine months ended September 30, 2020 and to include these charges for the three and nine months ended September 30, 2019.

Revenues of approximately $216.5 million and $458.4 million and net income of approximately $15.4 million and $27.6 million associated with the Interxion Combination are included in the condensed consolidated income statement for the three and nine months ended September 30, 2020.