Equinix to acquire Switch and Data in $689 million deal
22 October 2009 | 1304 views | 0
Equinix, Inc. (Nasdaq: EQIX), a provider of global data center services, and Switch & Data Facilities Company, Inc. (Nasdaq: SDXC), a leading provider of data center and Internet exchange services, have entered a definitive agreement for Equinix to acquire Switch and Data in a transaction valued at approximately $689 million in cash and stock, based on yesterday's market close.
The combination of the two companies will further strengthen Equinix's leadership position in the global data center services market by extending the company's presence to 16 new markets across North America. Equinix will integrate Switch and Data's data center business and operations, including the company's 34 data centers in 22 markets in the U.S. and Canada. The acquisition will add more than one million gross square feet of data center capacity, bringing Equinix's total global footprint to 79 data centers in 34 markets and more than six million square feet across the North American, European and Asia-Pacific markets. It will allow Equinix to immediately expand into new strategic markets, including Atlanta, Denver, Miami, Seattle and Toronto, as well as provide a platform for future expansion of Switch and Data assets.
The acquisition will help the companies' customers respond to two broad market trends. The rapid growth of demand for online information is requiring companies to store and distribute larger volumes of latency sensitive assets and applications at the network edge, near local population centers. At the same time, the market compels companies to develop global aggregation and distribution strategies for their digital assets and applications. The transaction is expected to give Equinix customers broader access to local markets for their network edge deployments, and Switch and Data customers a comprehensive solution to their global data center needs. The customers of both companies will benefit from a stronger product portfolio and capacity pipeline in a market where demand continues to outpace supply, and from doing business with a partner that brings together the capabilities of two companies with strong reputations for operational excellence and high customer satisfaction.
"The strategic acquisition of Switch and Data by Equinix further strengthens Equinix's position as the most comprehensive global data center services provider acacross North America, Asia-Pacific and Europe," said Steve Smith, president and CEO of Equinix. "Our complementary business models, coupled with Switch and Data's broad North American market coverage, provide a platform for strong growth as well as an opportunity to accommodate our customers' demands for additional services."
"For more than a decade, Switch and Data has provided colocation and data center services to support the needs of the world's leading online brands," said Keith Olsen, president and CEO of Switch and Data. "These businesses rely on Switch and Data to provide secure locations for them to connect and safeguard their mission-critical applications. The combination of Switch and Data's North American site footprint and Equinix's global reach will increase our addressable market, enhance our customers' value, and drive incremental value to our stockholders."
The parties are targeting completion of the transaction in the first quarter of 2010. The transaction will be subject to customary closing conditions, including the approval of Switch and Data's stockholders and regulatory approvals. The transaction is expected to qualify as a tax-free exchange to Switch and Data's stockholders with respect to the stock portion of the merger consideration. Equinix was advised by J.P. Morgan Securities Inc. and Davis Polk & Wardwell LLP. Switch and Data's lead financial advisor for the transaction was Piper Jaffray & Co., and Deutsche Bank Securities Inc. and RBC Capital Markets served as co-advisors; Switch and Data's legal advisor was Holland & Knight LLP. Raymond James & Associates, Inc. provided a fairness opinion to Switch and Data's Board of Directors with respect to this transaction.