Colocation giant Equinix is “in advanced discussions” to acquire a portfolio of data center sites, and has announced plans to sell $1.25 billion in common stock to fund the deal, the company said today.
The announcement comes amid an accelerated merger and financing environment created by the COVID-19 pandemic, as some companies seek to rapidly complete deals in progress, while others line up financing to ride out the jarring business disruption from lockdowns. Still other companies are weighting opportunistic acquisitions, as some providers contemplate exit strategies in a changed investment landscape.
Equinix said that if it completes the potential acquisition, it will use a portion of the proceeds from the stock the offering to fund the deal, and the remainder for “general corporate purposes,” including capital expenditures, working capital and reducing debt. If the deal falls through, all of the proceeds will go to general corporate purposes, leaving Equinix a larger warchest to build or buy more data centers.
What’s clear is that Equinix sees this as a moment of opportunity among surging demand for network capacity, driven by the massive societal shift to online services during the COVID-19 pandemic.
“We’re seeing a magnification of the role that Equinix plays not only for our customers, but in the basic operation of our society, Equinix CEO Charles Meyers said during the company’s earnings call last week. “The massive work-from-home experiment in which we find ourselves, has created a spike of near-term demand from a variety of customers, much of which we believe will sustain even as we calibrate on a new normal.
“Perhaps most importantly, the unique characteristics of this particular crisis have increased the resolve we see from customers relative to their focus on digital transformation as a long-term priority, and have highlighted the relevance of Equinix in supporting these efforts,” Meyers added.
Equinix has built a global data center empire, becoming a lynchpin of the Internet and digital business. With 200 data centers and 21 million square feet of space deployed across the globe, the company is a colocation colossus. Equinix focuses its infrastructure on the core of the Internet, building clusters of data centers around major network intersections like Northern Virginia, Silicon Valley, Chicago and Dallas.
As a colocation specialist, the company historically offered space in cages and cabinets where customers could deploy their own IT equipment. As Equinix moves beyond “power, pipes and ping,” it will reshape the competitive landscape for other colo providers, further blurring the lines between traditional business models.