Done Deal: Equinix Closes $3.6B Verizon Data Center Acquisition

Equinix announced closing of its $3.6 billion acquisition of a Verizon data center portfolio, a deal the companies agreed to in December.

The acquisition expands data center portfolio of the world’s largest retail colocation provider by 29 facilities in 15 metro areas in North America and South America, including the portfolio’s crown jewels in Miami and Culpeper, Virginia.

This was the largest in a series of recent deals where large telcos offloaded data center assets to reduce operational costs and raise capital. CenturyLink, Tata Communications, AT&T, and Windstream have all recently sold off large data center portfolios to service providers and private equity investors.

While Verizon was reportedly hoping to sell more than 50 data centers, including facilities in Europe and Asia, but Equinix ended up cherry-picking the sites that best fit its goals. Most of the sites it bought are in the US, with the exception of one location in Bogotá and one in São Paulo.

The two sites in Miami and Culpeper are responsible for more than half of the $450 million in revenue the entire portfolio generates annually, according to Equinix.

In-depth: Why Equinix Bought Verizon Data Centers for $3.6B

The NAP of the Americas carrier hotel in Miami is the crown jewel in the acquired portfolio. The building is a key interconnection hub between networks in the US and South America, making Equinix a gatekeeper for companies wanting to do digital business across the border between the two regions.

The other stand-out site is the four-building NAP of the Capital Region campus in Culpeper, serving lots of big enterprise and government customers.

About 250 Verizon employees (mostly operations staff) will be joining Equinix as part of the integration process, Equinix CEO Stephen Smith said on the company’s first-quarter earnings call last week. Another early integration step will be to interconnect Verizon and Equinix data centers in the markets where their footprints overlap.

Verizon will continue providing its enterprise services out of Equinix data centers, acting as the colocation company’s customer and reseller of its colocation services, which it plans to bundle with its own.

Equinix reported $950 million for the first quarter, up from $845 million in same period last year. Its net income for the quarter was $42 million, up from a $37 million loss reported in the first quarter of 2016 but down from $61.7 million in income reported for the fourth quarter of last year.

Here’s a look at other major telco data center divestments in recent years:

CenturyLink Sells Data Center Portfolio to Private Equity Investors for $2.3B

Tata Communications Sells Data Center Portfolio to ST Telemedia for $633M

Windstream Sells Data Center Business to TierPoint for $575M

IBM Takes Over AT&T’s Managed Hosting Business