Reportedly, global data center solution and service provider, Equinix Inc. EQIX has signed a deal to acquire Telecity Group Plc, a UK-based company. The cash-and-stock transaction is valued at approximately $3.6 billion, based on Telecity's closing stock price of 849 pence as on Feb 10, 2015. The move is part of Equinix’s efforts to bolster its digital marketing capabilities.
As reported, on completion of the deal, Telecity will retain roughly 10.1% stake of the combined group. Telecity Group is a provider of carrier-neutral data centers in Europe and offers secure and connected environments for IT and telecom equipment. The acquisition aims at expansion in Europe by meeting the growing demand for digital services.
In February, Telecity had planned to merge with Interxion for approximately $4.5 billion. However, Equinix offered a proposal to buy Telecity in May. The current deal means that Telecity’s plans to combine with Interxion will be terminated.
The European data center space will allow Equinix to tap strong demand from its network, content, cloud and financial services customers. This deal reaffirms service providers’ preference for data centers in their race to win market share. It also gives Equinix an opportunity to tap the yet unexplored European market.
No doubt the current deal will bode well for Equinix as we believe that that the expansion of data centers will strengthen the company’s portfolio in one of the major global trade hubs and financial centers.
Most recently, Equinix also revealed its plan to expand its presence in Hong Kong by building the third phase of its second International Business Exchange (IBX) data center (HK2) worth approximately $40 million.
Equinix remains positive on the growing demand for data centers driven by Big Data exchanges. To meet this demand, the global interconnection and data center company is expanding its IBX data centers globally and gaining popularity among tech companies looking for data management. Thus, the company expects its total addressable market for retail data centers to increase at a CAGR of 8% from 2013 to 2017 when it will reach $24.0 billion. Based on this projection, the company expects 10% revenue growth rate through 2017.
Nonetheless, Equinix competes with Internet data centers operated by established communications carriers such as AT&T T, Level 3 Communications LVLT and Verizon Communications VZ.
Currently, Equinix has a Zacks Rank #2 (Buy).
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