Data center giant Equinix has officially closed a $3.6 billion deal with telecommunications company Verizon, adding 29 facilities spanning the US, Brazil and Columbia to its already sizeable portfolio, amounting to an additional three million square feet of technical space.
I’ll take it
The all-cash transaction - confirmed in December last year following information obtained by an analyst, after rumors of Verizon’s intentions to sell emerged - includes the 750,000 sq ft (69,700 sq m) NAP of the Americas in Miami, the fourth largest Internet exchange point in the country; and the NAP complex in Culpeper, Virginia, which houses IT infrastructure for the US government.
The NAP of the Americas is the landing station for 15 separate sub-sea fiber cable systems, with access to 120 global networks in 150 countries. It “represents, from a data center and telecommunications standpoint, the gateway to the Caribbean, Center America and South America,” Equinix’ Americas president Karl Strohmeyer told the Miami Herald.
Equinix owns 179 data centers spanning 44 markets worldwide, but until recently mainly dealt with content and service providers, as well as financial services companies. The acquisition aims to expand the company’s customer base to include more enterprise and government clients.
Moving forward, Verizon will continue to sell Equinix colocation and interconnection services but will be handing over the maintenance, network operation and security back to the data center provider. The company reportedly intends to turn to video streaming and advertising as its main sources of revenue, as demonstrated by its recent acquisition of Yahoo and AOL, and the announcement of its new media division, Oath.
Verizon, similarly to CenturyLink, which sold its entire data center business (57 facilities) last year, has been looking to sell all 50 of its data centers, but Equinix, already having a significant footprint in European and Asian markets, only chose to purchase the facilities in the Americas.
Last year, the company was forced to sell eight of its data centers by EU antitrust regulators in exchange for approval of its $3.8 billion acquisition of TelecityGroup; and in 2015, it bought out Japanese provider Bit-isle, expanding its Asia-Pacific presence beyond existing footholds in Singapore, Hong Kong and Sydney.
By making the acquisition in cash, Equinix has enforced its status as a real estate investment trust (REIT). REIT membership translates into significant tax relief, but requires that companies spend at least 75 percent of their assets in real estate and cash in order to qualify.