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Digital Realty's $1.8b acquisition of Ascenty provides access to growing Latin America market

San Francisco-based Digital Realty announced this week the agreement to purchase Brazil’s Ascenty, one of Latin America’s leading data center providers, for an estimated $1.8 billion.Digital Realty will complete the transaction through Brazilian subsidiary Stellar Participações Ltda., and in partnership with Brookfield Infrastructure, an affiliate of Brookfield Asset Management. Brookfield has committed to funding half of the initial equity investment, valued at approximately $613 million, in exchange for 49% of the total equity interests in a joint venture entity ultimately expected to own Ascenty.In addition to the $1.8 billion purchase price, Digital Realty will provide approximately $425 million in additional capital for the completion of current data center developments and to build out additional capacity to service short-term client requirements.Ascenty provides data center and connectivity services to the world’s premier hyperscale cloud providers, and boasts eight leading-edge data centers strategically placed in key Brazilian urban centers, including Rio de Janeiro, São Paulo, Campinas, and Fortalezas.Ascenty also offers a full range of data center solutions via a proprietary 4,500-kilometer fiber-optic network that connects Brazil’s main population hubs and also imparts direct access to Brazilian telco and subsea cable networks.The purchase provides Digital Realty with a strategic foothold in a growing Latin America market fueled by expanding population growth and rapid digitization. Brazil is the world’s eighth largest economy by GDP and the fifth largest country by population and area, and is well-positioned to become the center of technology expansion in Latin America."We are pleased to expand our global footprint into Latin America and to partner with the Ascenty management team and Brookfield. We expect this acquisition will further accelerate our growth while enhancing our ability to support our customers' digital transformation across the globe," said Digital Realty Chief Executive Officer Bill Stein.In another move this week, the company launched a public offering of 8.5 million shares of common stock. At the current stock price, this offer could raise over $1 billion in additional capital for Digital Realty.The company also announced that it had reached an agreement to purchase 424 acres of undeveloped land in Loudoun County, Virginia for $236.5 million. The site is located next to Washington Dulles International Airport and lies less than four miles from Digital Realty's existing data center campuses in Ashburn, Virginia.This week’s multiple announcements come on the heels of Digital Realty’s Salesforce news, in which the company announced the availability of direct, private access to Salesforce in 15 metro centers worldwide via the Digital Realty Service Exchange. This follows similar initiatives by the company to expand the availability of cloud services from Oracle and IBM.The Ascenty purchase is expected to close in the fourth quarter of 2018. Digital Realty stock is currently trading at $112, down 5.5% from its close prior to the September 24th announcement.

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