Business Combinations |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combinations | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combinations | 3. Business Combinations On August 18, 2026, we completed the acquisition of Columbia Capital, an investment management platform focused on the communications, technology and digital infrastructure sectors (the “Columbia Capital Acquisition”). The Columbia Capital Acquisition expands the Company’s capabilities across the digital infrastructure ecosystem. In accordance with ASC 805, the Columbia Capital Acquisition was accounted for as a business combination using the acquisition method of accounting. The aggregate acquisition-date fair value of consideration transferred was approximately $690.1 million, consisting of 2.3 million shares of Digital Realty common stock with a fair value of $453.0 million, cash paid of $17.1 million and contingent consideration with a fair value of $220.0 million, payable in Digital Realty common stock. The contingent consideration relates to an earnout based on the achievement of specified future management fee performance targets and is included within Accounts payable and other accrued liabilities on the condensed consolidated balance sheets. The contingent consideration has a maximum payout of 1.5 million shares and is classified in Level 3 of the fair value hierarchy due to its significant inputs not being observable in the market, including a discount rate of approximately 13.75%. In connection with the Columbia Capital Acquisition, we incurred approximately $23 million in acquisition-related costs. These expenses are included in Transactions and integration on our condensed consolidated income statements. The following table summarizes the amounts recorded at the acquisition date (in thousands):
Goodwill — The purchase price of the Columbia Capital Acquisition exceeded the fair value of the identifiable net tangible and intangible assets acquired and liabilities assumed by approximately $499.1 million. This amount was recorded as goodwill. We believe the strategic benefits of the acquisition support the value of goodwill recorded. Specifically, the Columbia Capital Acquisition expands the Company’s investment management capabilities across the communications, technology and digital infrastructure sectors and provides an established investment management platform, customer relationships and investment management contracts. The acquisition is expected to enhance the Company’s ability to capitalize on future growth opportunities across the digital infrastructure ecosystem and expand its relationships with institutional capital partners. We believe that the goodwill recorded as a result of the Columbia Capital Acquisition will be deductible for federal income tax purposes. The Columbia Capital Acquisition was not material, and neither the assets acquired nor the results of operations of the acquired business were significant to the Company’s consolidated financial position or results of operations. Accordingly, pro forma financial information has not been presented. Customer relationships, deferred leasing costs and other intangibles, net — In connection with the Columbia Capital Acquisition, we recognized approximately $194.3 million of identifiable intangible assets, consisting primarily of $150.0 million related to existing investment management contracts, $42.6 million related to customer relationships and $1.7 million related to trade names. The intangible assets will be amortized over their respective useful lives as follows:
The purchase price allocation is preliminary, may be revised as additional information regarding facts and circumstances becomes available and is expected to be finalized within one year of the acquisition date. Any resulting measurement-period adjustments may affect the amounts assigned to the assets acquired and liabilities assumed, including goodwill. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||