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Equinix eats up Switch & Data Facilities

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Equinix, a large international hosting data centre operator, is buying Switch & Data Centre Facilities, a smaller north American operator, for $689m.

Equinix has 45 data centres, totalling around five million square feet, in Europe, Asia and the USA. Switch & Data Facilities has 34 data centres spread across the USA and Canada. Its total floor space amounts to just over one million square feet and, in 2008, its revenue was $171.5m whilst Equinix earned $704.7m.

Equinix connects network providers. It says it has every major US and international network as a customer and acts like an airport hub connecting businesses to the routes and/or carriers that lead to the desired destination. Customers include Google, Sony, Yahoo, Wells Fargo, J P Morgan, Amazon, HP and IBM.

The main reason the acquisition is being done is that businesses are facing increasing online data transmission needs, and need to distribute more information to edge locations in their networks so that customers and partners can get that information quickly without having to wait for a long-distance transfer.

The deal gets Equinix new data centre presence in places such as Atlanta, Denver, Miami, Seattle and Toronto. Its customers get broader access to local markets for their network edge deployments, and Switch and Data customers get a more comprehensive offering for their global data centre needs. The acquisition also positions Equinix to meet the needs, it says, of key network and cloud providers.

The data centre co-location and hosting market is growing strongly. Gartner figures show a 18.8 per cent CAGR for the 2008 to 2012 period with the 2009 market sized at $16.7bn and the 2012 market at $28.9bn.

Equinix says there are synergies that can be exploited and, where the two operators' data centre presence overlaps, the additional capacity can be sold to new customers. The deal is an example of the point that consolidation into bigger units is happening right across the networking and IT provision space. It may well be followed by others.

Overall, Equinix is buying SDF for $137.8m cash with the rest of the purchase paid for in Equinix stock. The deal should close in the first quarter of next year. ®

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