Equinix Buys European Rival TelecityGroup For $3.8 Billion - InformationWeek

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1/19/2016
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Equinix Buys European Rival TelecityGroup For $3.8 Billion

In a move that will strengthen its data center presence and customer offerings in Europe and around the world, Equinix is acquiring rival TelecityGroup for $3.8 billion.

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Equinix, the Redwood City, Calif.-based data center builder that frequently serves as a communications hub for cloud suppliers, has acquired its major rival in Europe, TelecityGroup, for $3.8 billion.

The multi-billion acquisition, which the company announced Jan. 15, will strengthen its position in the international market. With the purchase, Equinix will gain 40 colocation data centers in Europe and more than 1,000 existing customers. The move doubles its colocation and data center capacity in Europe.

It previously offered its Direct Connect service to Amazon Web Services cloud out of its existing London and Frankfurt data centers. The Telecity acquisition adds markets in Bulgaria, Finland, Ireland, Italy, Poland, Sweden, and Turkey.

Equinix is a primary supplier of Amazon's Direct Connect service for linking customers to the EC2 cloud, Microsoft's ExpressRoute, and IBM SoftLayer's DirectLink service.

(Image: KellyISP/iStockphoto)

(Image: KellyISP/iStockphoto)

The acquisition will make Equinix the largest retail colocation provider in Europe, company spokesmen said. Telecity's website also announced the acquisition, promising little will change for Telecity customers and noting that the combination "will enable Equinix to expand its platform throughout key European markets and further its strategy to increase network and cloud density ..."

Equinix frequently concentrates 60 to 70 communications carriers in each of its North American data centers, allowing enterprises to connect to one of its data center hubs, then be switched in the hub's "meet me" room for telecom carriers and onto the carrier of choice.

In select data centers it offers it Equinix Cloud Exchange, where enterprises can self-provision with connections to the cloud vendor of choice.

It's currently proposing that enterprises adopt an Interconnection-oriented architecture where they create high speed links to a data center hub, then use interconnection facilities in it to connect to business partners, customers, cloud suppliers, and other outside resources. To date, enterprises more typically employ a staff of networking professionals who build out such connections through one or a handful of favored carriers.

The transaction was approved earlier this month by Telecity shareholders, and the applicable court in the UK has approved the plan of acquisition. Both of those steps are required for closing. The deal requires a cash payment of $1.7 billion and the issuance of approximately 6.8 million shares of Equinix common stock, valued at approximately $2.1 billion.

[Want to learn more about Equinix role in the cloud? See Equinix Opens Faster Pipeline to AWS Deployments.]

Equinix has made three acquisitions in the last 12 months, including professional services company Nimbo in the US in January 2015, and Bit-isle in Japan in November. The Telecity and Bit-isle acquisitions significantly expand Equinix's global platform (after planned divestitures) from 105 data centers in 33 metropolitan areas to 145 centers in 40 city regions.

Charles Babcock is an editor-at-large for InformationWeek and author of Management Strategies for the Cloud Revolution, a McGraw-Hill book. He is the former editor-in-chief of Digital News, former software editor of Computerworld and former technology editor of Interactive ... View Full Bio

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Charlie Babcock
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Charlie Babcock,
User Rank: Author
1/20/2016 | 1:40:17 PM
Zynga originally built close to Equinix
At the height of Farmville's popularity, Zynga established its own data centers and built them in a region that was close to both Facebook and a Equinix data centers. That's because it needed to connect lots of customers to Facebook and vice versa, over low latency lines.
Charlie Babcock
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Charlie Babcock,
User Rank: Author
1/19/2016 | 6:08:55 PM
Imitators are starting to emerge
Equinix is the premier data center hub provider in major metropolitan markets, having gotten there before remote data center services became "the cloud." But there are smaller companies moving into this space as well, such as CetriLogic of Toronto, Rochester, Buffalo and Lenoir, North Carolina.
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