Equinix, Inc. (NASDAQ: EQIX) on June 1 announced it has entered into a definitive agreement to purchase a portfolio of 13 data centers across Canada from BCE Inc. (Bell) for US$750 million (CA$1,041 million) in an all-cash transaction.
The addition of these strategic assets, their associated operations and the more than 600 customers operating within the data centers, with more than 500 of these representing new customers, will further strengthen Equinix's global platform, which currently includes more than 210 data centers across 55 metros. The acquired customers comprise a diversity of sectors and segments, including enterprise, cloud and IT, government and financial services.
Equinix says the move will benefit businesses by: increasing interconnection within Canada and between Canada and the rest of the world, opening seven new metros in six provinces to extend the digital edge of Platform Equinix, and adding key customers in strategic sectors to further increase the value of the ecosystem available at Equinix. Under the terms of the agreement, Equinix and Bell will begin a strategic partnership to enable enterprises in Canada to leverage hybrid multicloud technologies to accelerate their digital transformation. The acquisition will expand Equinix's coverage in Canada coast to coast, making it a market leader in data center and interconnection services, the company says.
In addition to adding new capacity in Toronto, Ontario, where Equinix currently operates two International Business Exchange (IBX) data centers, the acquisition will extend Equinix's interconnection services to seven new metros. These include Calgary, Alberta; Kamloops and Vancouver, British Columbia; Millidgeville, New Brunswick; Montreal, Quebec; Ottawa, Ontario; and Winnipeg, Manitoba.
"The acquisition of these 13 strategic assets further extends the depth and breadth of Equinix's global platform," commented Jon Lin, President, Americas, Equinix. "Additionally, it opens key gateways for North America to Asia through Vancouver and North America to Europe through the submarine cable systems in the Millidgeville area."
The strategic partnership between Equinix and Bell stands to deliver integrated networking and hybrid multicloud services, both directly and through the combined partner ecosystems of the two companies. The joint offering will combine Bell's telecommunications services and technology expertise with Equinix's global platform of interconnected data centers and business ecosystems.
Tom Little, president, Bell Business Markets, said, "Our partnership with Equinix will further accelerate digital transformation opportunities for Canadian enterprise customers, combining access to Equinix's interconnected global data center platform with Bell's advanced broadband network connections, wide range of cloud solutions and experienced professional services team."
Over time, Equinix plans to introduce its Equinix Cloud Exchange Fabric (ECX Fabric) to all 13 data centers. ECX Fabric is an on-demand, SDN-enabled interconnection service that allows any business to connect between its own distributed infrastructure and any other company's distributed infrastructure, including the world's largest network service and cloud providers, on Platform Equinix.
Citi and J.P. Morgan acted as financial advisors to Equinix in the transaction. The acquisition is expected to close in 2H 2020, subject to customary closing conditions including regulatory approval, and it is expected to be immediately accretive to Equinix's adjusted funds from operations (AFFO) per share upon close, excluding integration costs.
The 13 data center sites, which represent 25 Bell data center facilities, are expected to generate approximately US$105 million (CA$150 million) annualized revenue (Q4'20E LQA), which represents a purchase multiple of approximately 15x EV / adjusted EBITDA.
Equinix notes its expansion across Canada unlocks opportunities for Canadian businesses expanding internationally and for multinational corporations pursuing growth and innovation in the Canadian market. Canadian companies will benefit from the ability to accelerate their evolution from traditional to digital businesses by rapidly scaling their infrastructure, easily adopting hybrid multicloud architectures and interconnecting with strategic business partners within the Platform Equinix ecosystem of nearly 10,000 customers.
Equinix notes Canada is the third largest economy in the Americas, and the 10th largest in the world. It is a high-growth market with a business focus on accelerating cloud adoption, and major cloud players have increased investments in Canada to accommodate this demand.
Charles Meyers, president and CEO of Equinix, concluded, "Canadian businesses are in the midst of a significant transformation as they evolve their operations to be increasingly digital and cloud-enabled. With a platform that enables companies to increase the scale, reach and connectivity of their growing digital businesses, Equinix provides a compelling vision for businesses to rapidly and broadly interconnect with the people, locations, cloud services and data that matter most to their business. This expansion is a significant win for Canadian businesses, as well as for multinational companies that can leverage Platform Equinix to increase their digital presence in Canada by interconnecting to a rich ecosystem of customers, business partners and other strategic companies in Canada."
Read a blog article by Equinix's Jon Lin on the acquisition.