Equinix Inc. (NASDAQ: EQIX) shares saw a handy gain on Tuesday after the company announced that it will be expanding. Essentially, the company is purchasing a portfolio of 24 data center sites and their operations from Verizon Communications Inc. (NYSE: VZ) for $3.6 billion in an all cash transaction.
The 24 sites consist of 29 data center buildings. The addition of these strategic facilities and customers will further strengthen Equinix’s global platform for a few reasons. First it will increase interconnection in the United States and Latin America, as well as open three new markets in Bogotá, Culpeper and Houston. Not to mention this also will help the company to break into the government and energy sectors.
The acquisition of these assets will enable Equinix customers to further develop their “digital businesses.” Additionally, these customers will have the opportunity to operate on an expanded global platform to process, store and distribute larger volumes of latency sensitive data and applications at the digital edge, closer to end-users and local markets.
The acquired portfolio includes roughly 900 customers, with a significant number of enterprise customers new to Equinix’s platform, and it adds roughly 2.4 million gross square feet. It will bring Equinix’s total global footprint to 175 data centers in 43 markets and approximately 17 million gross square feet across the Americas, Europe and Asia-Pacific markets.
Steve Smith, president and CEO of Equinix, commented:
This unique opportunity complements and extends Equinix’s strategy to expand our global platform. It enables us to enhance cloud and network density to continue to attract enterprises, while expanding our presence in the Americas. The new assets will bring hundreds of new customers to Platform Equinix while establishing a presence in new markets and expanding our footprint in existing key metros. The deal will also provide significant value for shareholders as the proposed transaction is expected to be immediately accretive to our adjusted funds from operations per share upon close.
Shares of Equinix were trading up 2% at $338.63 midday Tuesday, with a consensus analyst price target of $412.47 and a 52-week trading range of $255.45 to $391.07.