(WEB HOST INDUSTRY REVIEW) — On the same day it issued its earnings results for the third quarter of 2009, data center giant Equinix (www.equinix.com) announced on Wednesday that it would acquire rival Switch and Data (www.switchanddata.com) in a deal worth approximately $689 million in cash and stock.
The deal combines two of the largest players in the data center business, and two from among the handful of publicly traded hosting providers, firmly establishing Equinix as the leader in the data center business – a position it already held convincingly.
Equinix says the combination will strengthen its position in the data center services market by extending its presence into 16 new markets across North America. Those 16 markets are among the 22 markets served by Switch and Data’s 34 North American data centers, and include , Denver, Miami, Seattle and Toronto.
“The strategic acquisition of Switch and Data by Equinix further strengthens Equinix’s position as the most comprehensive global data center services provider across North America, Asia-Pacific and Europe,” says Equinix CEO Steve Smith, quoted in the company’s press release. “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.”
The deal, says Equinix, adds more than a million gross square feet of data center capacity to the company’s total global footprint, now totaling more than six million square feet in North America, Europe and Asia-Pacific. The combined organization will operate 79 data centers in 34 markets.
According to the announcement the deal will help customers respond to a couple of significant market trends, including the increasing need to store and distribute larger volumes of information and applications at the network edge, geographically close to population centers; and the need for companies to “develop global aggregation and distribution strategies.”
The companies say the deal has the potential to provide customers with access to a broader range of data center capacity in a market where demand continues to outstrip supply. On Monday, we reported on projections that demand for data center capacity had tripled supply in the US.
Equnix and Switch and Data were on a very short list of companies actively building out data center capacity during 2008 and 2009, in light of the tight credit markets. Last week we reported that Equinix had announced plans to build a second data center in Geneva, Switzerland.
The companies expect the deal to close in the first quarter of 2010. Switch and Data stockholders can choose to receive 0.19409 shares of Equinix stock or $19.06 in cash for each share of Switch and Data stock. The merger will be pro-rated so that the total consideration will be made up of 80 percent Equinix stock and 20 percent cash.
