Equinix: Datacenter dominance

Contact: Brenon Daly, Jeff Paschke, Aleetalynn Schenesky-Stronge

Wrapping up one of the largest recent deals in the datacenter market, Equinix said Monday that it has closed its $683m purchase of rival Switch and Data. (No fewer than five banks claimed a print on the transaction.) Terms call for Equinix to hand over $134m in cash and $549m in equity. Since the deal was announced in late October, shares of Equinix have added some 4% while the Nasdaq has gained 15%.

The consolidation play by Equinix creates the largest multi-tenant datacenter provider in an otherwise extremely fragmented market. Our colleagues at Tier1 Research estimate that there are more than 350 datacenter providers in North America alone. After the combination, Equinix will control 11% of the North American colocation market, up from 8.5% on its own, according to T1R. The acquisition of Switch and Data adds 16 new metropolitan areas in North America where Equinix will now offer service, including Atlanta, Toronto, Denver, Miami and Seattle.

On its own, Equinix recorded revenue of $882m last year and analysts projected that the company would hit $1bn this year. Switch and Data bumps up the vendor’s top line by about 20%. Equinix will provide further financial details of the combination during an investor presentation on Thursday.