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Equinix sells eight European datacentres to rival Digital Realty for $874m

As Equinix sells off eight European datacentres to rival Digital Realty, analyst Steve Wallage predicts what the fallout from the deal might be

The divesture of eight datacentres by colocation giant Equinix may force operators to look further afield for future acquisition targets, as the supply of viable European assets dwindles.   

Datacentre operator Digital Realty has agreed to acquire eight European facilities belonging to Equinix for $874 million, including five in London, two in Amsterdam and another in Frankfurt.

This equates to 24.4 megawatts of IT capacity that is understood to be used by around 650 network, cloud and IT providers to deliver their services. According to Digital Realty, the sites are at around 72% capacity.

Speaking to Computer Weekly, Steve Wallage, managing director of datacentre market-focused analyst firm Broadgroup, said the sell-off is likely to sharpen the minds of operators mulling over when to embark on some mergers and acquisitions activity of their own.

“The speculation about the divesture of these assets has put a lot of focus on that area for operators, but there is still a bit of caution because some of the datacentre valuations are still quite high,” he said.

Many operators are interested in firms that have facilities in several European markets, but these types of assets are in relatively short supply, prompting some to look further afield.

“They could do a rollup strategy, where they try to acquire an operator in each market and put them altogether [under a single brand], as a big concern for buyers is – if they don’t move soon – there might be nothing left worth spending their money on,” Wallage added.

“We’ve seen a big focus on the big four markets – Frankfurt, London, Amsterdam and Paris – and there is growing interest in some of the less-developed European markets now, including Scandinavia, Madrid and Milan.”

The great big datacentre sell-off

The Equinix datacentre sell-off was ordered by European Commission (EC) anti-trust chiefs in November 2015 who feared – without such a caveat in place – the operator’s £2.35bn acquisition of TelecityGroup could harm the wider competitiveness of the continent’s datacentre market.

The EC agreed to approve the merger, which closed in January 2016, provided Equinix committed to divesting a number of its colocation sites first.

Incidentally, the EC also needs to approve Digital Realty’s acquisition of the Equinix sites, which the firm hopes to secure sometime during the second half of 2016.

Read more about datacentre mergers and acquisitions

William Stein, CEO of Digital Realty, said the acquisition marks an important step in ramping up the firm’s geographical reach.

“We have made several recent strategic investments in Europe, and this new portfolio – which is concentrated in three of the most strategically important datacentre and interconnection hubs in Europe – will immediately bring on board a large, diversified customer base,” said Stein.

“[It] will also provide significant opportunities to grow and extend our footprint across the continent for years to come.” ... ... ... ... ... ...

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