Equinix to Buy Verizon Data Centers for $3.6 Billion

Data center REIT Equinix, Inc. (Nasdaq: EQIX) said Dec. 6 it has agreed to buy a portfolio of 24 data center sites from telecommunications company Verizon Communications Inc. for $3.6 billion in an all-cash transaction.

The 24 sites consist of 29 data center buildings across 15 metro markets in the United States and Latin America.

In a conference call, Steve Smith, president and CEO of Equinix, said the deal “positions us to continue to attract global data center demand.”

Equinix said the deal, which is expected to close by mid-2017, accelerates its penetration of the enterprise and strategic market sectors, including government and energy.

“Our expanded footprint will offer our customers lower latency, reduced bandwidth costs and increased revenue,” said Karl Strohmeyer, president of Equinix Americas.

Matthew Heinz, an analyst at Stifel, said the deal is in line with Equinix’s overall strategy.

“The size, scope, valuation and strategic rationale for the transaction are consistent with prior acquisitions and the company’s focus on network-dense interconnection assets,” he said. Heinz noted that the deal positions Equinix for accelerated growth in Latin America and provides access to the “coveted” enterprise and government markets in Houston and Culpeper, Virginia.

One of the assets included in the transaction is the Network Access Point (NAP) of the Americas facility in Miami. Equinix described the site as a “key interconnection point,” which will become a strategic hub and gateway for Equinix customer deployments servicing Latin America. Combined with the Verizon data centers in Bogotá and the NAP do Brasil in São Paulo, it will strategically position Equinix in the growing Latin American market, the company said.

Equinix noted that a significant number of its new clients are enterprise customers that are new to its platform. Many are Fortune 1000 companies, according to Equinix, or federal and local government entities. Verizon will remain a substantial customer and key partner following the close of the transaction, Equinix added.