DUPONT FABROS TECHNOLOGY, INC. (NYSE:DFT) Files An 8-K Entry into a Material Definitive Agreement
Item1.01. Entry into a Definitive Agreement.
On June8, 2017, DuPont Fabros Technology, Inc., a Maryland
corporation (the Company), and DuPont Fabros Technologies, L.P.,
a Maryland limited partnership (the Company Operating Partnership
and, together with the Company, the DuPont Parties) and Digital
Realty Trust, Inc., a Maryland corporation (DLR), Digital Realty
Trust, L.P., a Maryland limited partnership (the DLR Operating
Partnership), Penguins REIT Sub, LLC, a Maryland limited
liability company and wholly owned subsidiary of DLR (Merger
Sub), Penguins OP Sub 2, LLC, a Maryland limited liability
company and wholly owned subsidiary of the DLR Operating
Partnership (Merger Sub GP), Penguins OP Sub, LLC, a Maryland
limited liability company and subsidiary of the DLR Operating
Partnership and Merger Sub GP (the Partnership Merger Sub and,
together with DLR, the DLR Operating Partnership, Merger Sub and
Merger Sub GP, the DLR Parties), entered into an Agreement and
Plan of Merger (the Merger Agreement) to which, subject to the
satisfaction or waiver of certain conditions, the Company will be
merged with and into Merger Sub (the REIT Merger) and the
Partnership Merger Sub will be merged with and into the Company
Operating Partnership (the Partnership Merger and, together with
the REIT Merger, the Mergers). Upon completion of the REIT
Merger, Merger Sub will survive and the separate corporate
existence of the Company will cease. Upon completion of the
Partnership Merger, the Company Operating Partnership will
survive and the separate existence of Partnership Merger Sub will
cease.
The board of directors of the Company (the DuPont Board)
unanimously determined and declared that (a)the REIT Merger,
substantially upon and in accordance with the terms and
conditions of the Merger Agreement, and the other transactions
contemplated by the Merger Agreement, are advisable and in the
best interests of, the Company and its stockholders and
(b)directed that the REIT Merger and the other transactions
contemplated by the Merger Agreement be submitted for
consideration at a meeting of the Companys stockholders and
(c)resolved to recommend that the Companys stockholders vote in
favor of the approval of the REIT Merger and the other
transactions contemplated by the Merger Agreement and to include
such recommendation in the joint proxy statement.
The board of directors of DLR (the DLR Board) unanimously
determined and declared that (a)the Mergers, substantially upon
and in accordance with the terms and conditions of the Merger
Agreement, and the other transactions contemplated by the Merger
Agreement, are advisable and in the best interests of, DLR and
its stockholders, (b)directed that the issuance of shares of
common stock, par value $0.01 per share, of DLR (the DLR Common
Stock) in connection with the Mergers be submitted for
consideration at a meeting of DLRs stockholders, and (c)resolved
to recommend that the stockholders of DLR vote in favor of the
approval of the issuance of shares of DLR Common Stock in
connection with the Mergers and to include such recommendation in
the joint proxy statement.
to the terms and conditions in the Merger Agreement, at the
effective time of the REIT Merger (the REIT Merger Effective
Time), (i)each share of common stock, $0.001 par value per share,
of the Company (the Company Common Stock) issued and outstanding
immediately prior to the REIT Merger Effective Time will be
converted into the right to receive 0.545 (the Exchange Ratio)
validly issued, fully paid and nonassessable shares of DLR Common
Stock (the Common Consideration); (ii)each share of 6.625% Series
C Cumulative Redeemable Perpetual Preferred Stock, $0.001 par
value per share, of the Company (the Company Preferred Stock)
will be converted into the right to receive one validly issued,
fully paid and nonassessable share of a newly designated class of
preferred stock of DLR, the 6.625% Series C Cumulative Redeemable
Perpetual Preferred Stock, par value $0.01 per share of DLR,
having substantially similar rights, privileges, preferences and
interests as the DuPont Preferred Stock (the DLR Series C
Preferred Stock and such consideration, the Preferred
Consideration and, together with the Common Consideration, the
Merger Consideration).
In addition, at the REIT Merger Effective Time, (i)each
outstanding share of restricted Company Common Stock (each, a
Restricted Company Share) granted under the Companys 2007 Equity
Compensation Plan or the Companys 2011 Equity Incentive Plan, in
each case, as amended from time to time (together, the Company
Equity Plans), will vest and all restrictions thereon will lapse,
and each such Restricted Company Share will be cancelled in
exchange for the right to receive the Common Consideration,
(ii)each outstanding award of performance stock units granted
under the Company Equity Plans (the Company PSUs) will vest at
the greater of (a)the applicable target-level of performance or
(b)actual performance through the REIT Merger Effective Time in
accordance with the applicable Company PSU award agreement, and
each such vested Company PSU will be cancelled and converted into
the right to receive the Common Consideration, and (iii)each
outstanding and unexercised option to purchase shares of Company
Common Stock granted under the Company Equity Plans (the Company
Options) will be automatically converted into an option
(x)covering a number of shares of DLR Common Stock equal to the
number of shares of Company Common Stock subject to such Company
Option immediately prior to the REIT Merger Effective Time
multiplied by the Exchange Ratio, rounded down to the nearest
whole share, and (y)with an exercise price per share of DLR
Common Stock equal to the exercise price per share of such
Company Option as of immediately prior to the REIT Merger
Effective Time, divided by the Exchange Ratio, rounded up to the
nearest whole cent (each converted and assumed Company Option, an
Assumed Option). Each Assumed Option will be subject to
substantially the same vesting, expiration and other terms and
conditions applicable to the underlying Company Option as of
immediately prior to the REIT Merger Effective Time.
At the effective time of the Partnership Merger (the Partnership
Merger Effective Time), each unit of partnership interests in the
Company Operating Partnership issued and outstanding immediately
prior to the Partnership Merger Effective Time held by a limited
partner of the Company Operating Partnership will be converted
into the right to receive 0.545 common units in the DLR Operating
Partnership. In the alternative, limited partners in the Company
Operating Partnership may elect to redeem their units of
partnership interests in the Company Operating Partnership in
order to receive the Common Consideration. The membership
interests of Partnership Merger Sub issued and outstanding
immediately prior to the effective time of the Partnership Merger
will automatically be cancelled and retired and will cease to
exist, and no payment will be made with respect thereto.
The DLR Parties and DuPont Parties each made certain customary
representations, warranties and covenants in the Merger
Agreement, including, among others, covenants by each party to
conduct its business in all material respects in the ordinary
course of business consistent with past practice, subject to
certain exceptions, during the period between the execution of
the Merger Agreement and the consummation of the Mergers.
The consummation of the Mergers is subject to certain customary
closing conditions, including, among others, approval of the REIT
Merger by the holders of a majority of the outstanding shares of
Company Common Stock, approval of the issuance of DLR Common
Stock in connection with the Mergers by a majority of the votes
cast by the holders of DLR Common Stock at a meeting of DLRs
stockholders, the absence of certain legal impediments to the
consummation of the Mergers, the effectiveness of a registration
statement on Form S-4 to be filed by DLR in connection with the
Mergers, approval for listing on the New York Stock Exchange of
the shares of DLR Common Stock to be issued in connection with
the Mergers, the absence of a material adverse effect on either
DLR or the Company and compliance by the DLR Parties and the
DuPont Parties with their respective obligations under the Merger
Agreement. The obligations of the parties to consummate the
Mergers are not subject to any financing condition or the receipt
of any financing by the DLR Parties.
The Merger Agreement requires the Company to convene a
stockholders meeting for purposes of obtaining the approval of
the holders of a majority of the outstanding shares of Company
Common Stock, and subject to certain exceptions, the Company has
agreed not to (i)solicit, initiate or knowingly facilitate or
assist any inquiry or the making of any proposal or offer that
constitutes, or would reasonably be expected to lead to, a
Competing Proposal (as defined in the Merger Agreement),
(ii)engage in, continue or otherwise participate in any
discussions or negotiations regarding any proposal or offer that
constitutes, or would reasonably be expected to lead to, a
Competing Proposal, or furnish to any other person information or
afford to any other person access to the business, properties,
assets or personnel of the Company or any of its subsidiaries, in
each case, in connection with, or for the purposes of
facilitating or assisting, a Competing Proposal, or (iii)enter
into any contract (including any letter of intent or agreement in
principle) with respect to a Competing Proposal.
Prior to the approval of the Merger Agreement by the Companys
stockholders, the DuPont Board may in certain circumstances
effect a Company Adverse Recommendation Change (as defined in the
Merger Agreement), subject to complying with certain notice and
other specified conditions set forth in the Merger Agreement.
The Merger Agreement may be terminated under certain
circumstances by the Company, including prior to the approval of
the Merger Agreement by the Companys stockholders, in the event
that the Company receives a Competing Proposal that the Company
concludes, after following certain procedures and adhering to
certain restrictions, is a Superior Proposal (as defined in the
Merger Agreement), so long as the Superior Proposal was not
preceded by a material breach by the Company of the
non-solicitation provisions of the Merger Agreement. In addition,
DLR may terminate the Merger Agreement under certain
circumstances and subject to certain restrictions, including if
the DuPont Board effects a Company Adverse Recommendation Change.
Upon a termination of the Merger Agreement, under certain
circumstances, the Company will be required to pay a termination
fee to DLR of $150 million. DLR will be required to pay the
Company a termination fee of $300 million if DLR fails to
consummate the REIT Merger upon satisfaction or waiver of the
conditions to the closing of the Mergers or if the DLR Board
changes or qualifies its recommendation or fails to include its
recommendation in the joint proxy statement.
The Company, the Company Operating Partnership and the limited
partners of the Company Operating Partnership are party to a tax
protection agreement (the Tax Protection Agreement) which
provides, among other things, that the Company Operating
Partnership and the Company will make certain debt allocations to
the limited partners for purposes of protecting the limited
partners tax bases in the Company Operating Partnership. The
Merger Agreement provides that DLR and the DLR Operating
Partnership will assume the Tax Protection Agreement and that the
Company, the Company Operating Partnership and certain limited
partners will cooperate with DLR and the DLR Operating
Partnership to arrange for appropriate debt allocations and enter
into a new Tax Protection Agreement.
The foregoing description of the Merger Agreement does not
purport to be complete, and is qualified in its entirety by
reference to the full text of the Merger Agreement, which is
attached hereto as Exhibit 2.1 and is incorporated herein by
reference. A copy of the Merger Agreement has been included to
provide stockholders with information regarding its terms and is
not intended to provide any factual information about the DLR
Parties or the DuPont Parties. The representations, warranties
and covenants contained in the Merger Agreement have been made
solely for the purposes of the Merger Agreement and as of
specific dates; were solely for the benefit of parties to the
Merger Agreement; and are not intended as statements of fact to
be relied upon by the Companys stockholders or DLRs stockholders,
but rather as a way of allocating the risk between the parties to
the Merger Agreement in the event the statements therein prove to
be inaccurate; have been modified or qualified by certain
confidential disclosures that were made between the parties in
connection with the negotiation of the Merger Agreement, which
disclosures are not reflected in the Merger Agreement attached
hereto; may no longer be true as of a given date; and may apply
standards of materiality in a way that is different from what may
be viewed as material by stockholders. Accordingly, stockholders
should not rely on the representations, warranties and covenants
or any descriptions thereof as characterizations of the actual
state of facts or condition of the DuPont Parties or the DLR
Parties. Moreover, information concerning the subject matter of
the representations and warranties may change after the date of
the Merger Agreement, which subsequent information may or may not
be fully reflected in the Companys public disclosures. The
Company acknowledges that, notwithstanding the inclusion of the
foregoing cautionary statements, it is responsible for
considering whether additional specific disclosures of material
information regarding material contractual provisions are
required to make the statements in this Current Report on Form
8-K not misleading.
Additional Information and Where to Find It
This communication does not constitute an offer to sell or a
solicitation of an offer to buy any securities or a solicitation
of any vote or approval. This communication is being made in
respect of the proposed transaction involving the Company and
DLR. The proposed transaction will be submitted to the
stockholders of the Company and DLR for their consideration. In
connection with the proposed transaction, DLR intends to file
with the Securities and Exchange Commission (the SEC) a
registration statement on Form S-4 that will include a joint
proxy statement of the Company and DLR and that also constitutes
a prospectus of the Company. The Company and DLR plan to file
with the SEC other documents regarding the proposed transaction.
STOCKHOLDERS ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION AND ANY
OTHER RELEVANT DOCUMENTS CAREFULLY AND IN THEIR ENTIRETY WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION. After the
registration statement has been declared effective by the SEC, a
definitive joint proxy statement/prospectus will be mailed to the
Companys stockholders. You may obtain copies of all documents
filed with the SEC concerning the proposed transaction, free of
charge, at the SECs website at www.sec.gov. In addition,
stockholders may obtain free copies of the documents filed with
the SEC by the Company by going to the Companys corporate website
at www.dft.com or by directing a written request to: DuPont
Fabros Technology, Inc., 401 9th St. NW, Suite 600, Washington,
DC 20004, Attention: Investor Relations.
Interests of Participants
The Company and DLR and each of their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies from the stockholders of the Company in
connection with the proposed transaction. Information regarding
the Companys directors and executive officers is set forth in the
Companys proxy statement for its 2017 annual meeting of
stockholders and its Annual Report on Form 10-K for the fiscal
year ended December31, 2016, which were filed with the SEC on
April13, 2017 and February23, 2017, respectively. Information
regarding DLRs directors and executive officers is set forth in
DLRs proxy statement for its 2017 annual meeting of stockholders
and its Annual Report on Form 10-K for the fiscal year ended
December31, 2016, which were filed with the SEC on March29, 2017
and March1, 2017, respectively. Additional information regarding
persons who may be deemed to be participants in the solicitation
of proxies in respect of the proposed transaction will be
contained in the proxy statement to be filed by DLR with the SEC
when it becomes available.
Cautionary Statement Regarding Forward-Looking
Statements
This communication contains certain forward-looking statements as
that term is defined by Section27A of the Securities Act of 1933,
as amended, and Section21E of the Securities Exchange Act of
1934, as amended. 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 Companys or DLRs 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: the failure to
receive, on a timely basis or otherwise, the required approvals
by the Companys or DLRs stockholders; the risk that a condition
to closing of the proposed transaction may not be satisfied; the
Companys or DLRs ability to consummate the Mergers; the
possibility that the anticipated benefits and synergies from the
proposed transaction cannot be fully realized or may take longer
to realize than expected; the possibility that costs or
difficulties related to the integration of the Companys and DLRs
operations will be greater than expected; operating costs and
business disruption may be greater than expected; the ability of
the Company, DLR, or the combined company to retain and hire key
personnel and maintain relationships with providers or other
business partners pending the consummation of the transaction;
and the impact of legislative, regulatory and competitive changes
and other risk factors relating to the industries in which the
Company and DLR operate, as detailed from time to time in each of
the Companys and DLRs reports filed with the SEC. There can be no
assurance that the proposed transaction will in fact be
consummated.
Additional information about these factors and about the material
factors or assumptions underlying such forward-looking statements
may be found under Item1.A in each of the Companys and DLRs
Annual Report on Form 10-K for the fiscal year ended December31,
2016. The Company and DLR caution that the foregoing list of
important factors that may affect future results is not
exhaustive. When relying on forward-looking statements to make
decisions with respect to the proposed transaction, stockholders
and others should carefully consider the foregoing factors and
other uncertainties and potential events. All subsequent written
and oral forward-looking statements concerning the proposed
transaction or other matters attributable to the Company and DLR
or any other person acting on their behalf are expressly
qualified in their entirety by the cautionary statements
referenced above. The forward-looking statements contained herein
speak only as of the date of this communication. Neither the
Company nor DLR undertakes any obligation to update or revise any
forward-looking statements for any reason, even if new
information becomes available or other events occur in the
future, except as may be required by law.
Item9.01. Financial Statements and Exhibits.
(d) The following exhibit is attached to this Current Report on
Form 8-K:
|
ExhibitNo. |
Description |
|
| 2.1* |
Agreement and Plan of Merger, dated June 8, 2017, by and among DuPont Fabros Technology, Inc., DuPont Fabros Technologies, L.P., Digital Realty Trust, Inc., Digital Realty Trust, L.P., Penguins REIT Sub, LLC, Penguins OP Sub 2, LLC, and Penguins OP Sub, LLC |
| * |
Each of the DuPont disclosure letter and the DLR disclosure letter has been omitted to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish copies of the omitted disclosure letter supplementally upon request by the SEC. |
to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
| DUPONT FABROS TECHNOLOGY, INC. | ||||||
| June9, 2017 | /s/ Richard A. Montfort, Jr. | |||||
| Richard A. Montfort, Jr. | ||||||
| General Counsel and Secretary |
EXHIBIT INDEX
|
ExhibitNo. |
Description |
|
| 2.1* |
Agreement and Plan of Merger, dated June 8, 2017, by and among DuPont Fabros Technology, Inc., DuPont Fabros Technologies, L.P., Digital Realty Trust, Inc., Digital Realty Trust, L.P., Penguins REIT Sub, LLC, Penguins OP Sub 2, LLC, and Penguins OP Sub, LLC |
| * |
Each of the DuPont disclosure letter and the DLR disclosure letter has been omitted |
About DUPONT FABROS TECHNOLOGY, INC. (NYSE:DFT)
DuPont Fabros Technology, Inc. (DFT) is a real estate investment trust (REIT). The Company is a self-administered and self-managed company that owns, acquires, develops and operates wholesale data centers. The Company’s customers outsource their applications, and include national and international enterprises across various industries, such as technology, Internet content providers, media, communications, cloud providers, healthcare and financial services. Its data centers are located in four population centers: Northern Virginia; suburban Chicago, Illinois; Piscataway, New Jersey, and Santa Clara, California. The Company owns various properties, including approximately 10 operating data centers facilities; over three phases of existing data center facilities under development; approximately two data center facilities with phases that are available for future development, and over three parcels of land held for future development of data centers.