A substantial amount of colo space will be changing hands according to this morning's news. Equinix has decided to divest itself of eight data centers over in Europe, and Digital Realty has stepped up to acquire the assets for approximately $874M. In parallel, Equinix gets a binding option to acquire Digital Realty's facility in St. Denis, Paris.
Seven of the facilities moving from Equinix to Digital Realty are former TelecityGroup locations, including Bonnington House, Sovereign House, Meridian Gate and Oliver's Yard in London; Science Park and Amstel Business Park I in Amsterdam; and Lyonerstrasse data center in Frankfurt. The other is Equinix's West Drayton data center in London. In all, the transaction covers 213,000 net sellable squre feet with 24.4MW of IT load, of which about 30% is available to lease.
Equinix closed the Telecity deal in January, significantly boosting its presence in Europe overall, adding a series of new markets but also some duplicate coverage that it had promised regulators to divest. Meanwhile, Digital Realty has been looking to broaden its European scope somewhat, and with the Telx deal the two companies have become more direct competitors in the market generally. The deal seems therefore to be mutually beneficial, although not entirely voluntary of course given the regulatory involvement.
Today's transaction is expected to close sometime in Q3. The purchase price of $874M is said to be approximately 13 times the expected 2016 EBITDA for the combined eight assets, which for those without a calculator works out to about $67M. Digital Realty will fund the purchase, at least in part, via a stock offering also announced this morning.