|Equinix Inc., world’s largest carrier-neutral data center and colocation provider, struck a deal with Verizon Communications Inc. on Tuesday, Dec. 6. For $3.6 billion, California-based Equinix obtained 24 Verizon data center sites which will help the IT giant expand further into the U.S. and Latin America.
Verizon, along with other telecom companies, is selling its data centers, which are under-performing, in order to focus on more lucrative business ventures that correspond with their core business.
Verizon Chief Executive Lowell McAdam said that Verizon’s data centers were not to scale in relation to the company’s other investments.
Verizon’s plan is to “trim the branches of the tree so the tree can be stronger,” McAdam said.
In addition to the data centers, Verizon has also sold parts of its landline operation to Frontier Communications Corp., and some of its cell tower assets to American Tower Corporation. Its most recent focus is the web, leading the company to make cash deals with both Yahoo Inc. and AOL.
This deal is the biggest that Equinix has made since its purchase of U.K.-based Telecity PLC in 2015, which was also worth approximately $3.6 billion.
“All of the assets to us are very strategic,” said Equinix President Karl Strohmeyer.
The all-cash deal with Verizon will increase the number of Equinix data centers to 175 globally. Its newest properties are located in 15 American metro markets, including Houston, TX; Culpeper, VA, and Bogotá, Colombia. The deal is expected to be finalized sometime in the middle of next year.
These new data centers are expected to bring Equinix roughly 900 customers, who are mostly new to the company. Equinix operates data centers around the world that are used by data and web companies, like Verizon, to connect to each other’s networks and increase user experience and network availability.
The main goal of this purchase by Equinix is to expand the company’s customer base and global footprint.
So far, the deal has seemed to benefit both companies. On the date of the deal, Equinix shares increased by 2.3% to $339.85, while Verizon’s rose 1.5% to $50.20. As of Thursday, Dec. 8, Equinix shares are now worth $342.14 and Verizon shares are worth $51.20.
The average life span of a data center is roughly nine years. It is unclear how old each of these newly acquired data centers are and whether Equinix will need to make improvements.