Divests assets in non-core markets; sharpens focus on developing ecosystems in high-performing data centers
Equinix, Inc. (Nasdaq: EQIX), a provider of global data center services, have announced plans to sell 16 International Business Exchange™ (IBX®) data centers located throughout the United States to an investment group consisting of 365 Main, Crosslink Capital and Housatonic Partners in a transaction valued at approximately $75 million. After the close of the transaction, 365 Main will own and manage the 16 data centers, led by industry veterans Chris Dolan, CEO, and Jamie McGrath, COO. The transaction is expected to close in Q4 2012, subject to customary closing conditions.
“As we sharpen our focus on developing business ecosystems, we are prioritizing the largest global markets required by our targeted customers and applications that are driving growth across Platform Equinix,” said Charles Meyers, president of the Americas for Equinix. “We believe the divestiture of these assets will allow us to focus our capital and energy on our most productive data centers and will ensure that customers at these sites will be supported by an experienced data center operator that will continue to invest in these locations. We are excited to partner with 365 Main to make this transaction a success.”
“We have been continuously evaluating the data center market and believe the opportunity to enter 16 U.S. markets creates a solid platform for 365 Main,” said Chris Dolan, president and founding partner, 365 Main. “We are pleased to be back in this industry and to draw on our 15 years of data center experience to deliver on our strong reputation for customer service and retention.”
Nine of the 16 data centers are in markets Equinix will exit with the close of the sale. Those markets include Buffalo, Cleveland, Detroit, Indianapolis, Nashville, Phoenix, Pittsburg, St. Louis and Tampa. The remaining seven data centers are in markets where Equinix will retain a presence and currently has sufficient capacity to meet customer demand. These sites include CH6 (427 La Salle, Chicago), DC9 (11513-19 Sunset Hills Road, Reston, VA), DA5 (4101 Bryan St., Dallas), NY10 (65 Broadway, New York), PH2 (3701 Market St., Philadelphia), SE1 (1914 Third Ave., Seattle), and SV7 (534 Stockton Ave., San Jose).
The 16 sites represent approximately 280,000 total gross square feet of data center space. The Equinix customers deployed in the 16 data centers will be transferred to 365 Main as part of the transaction. Additionally, key employees who have experience with these sites and their customers will be joining 365 Main to facilitate a seamless transition and ongoing support for customers.
Equinix estimates that the 16 data centers generate less than two percent of the company’s annual revenues. With the announcement of this transaction, the financial results derived from these 16 data centers will be excluded from Equinix’s continuing operations for the quarter and will be reflected as discontinued operations. As a result, Equinix will retroactively adjust its financial results for all applicable prior periods beginning April 30, 2010, the date the company acquired these assets, to reflect them as discontinued operations as required under accounting principles generally accepted in the United States of America.
For this transaction Davis Polk & Wardwell LLP and The Bank Street Group LLC served as legal and financial advisors to Equinix.