Transaction Expands Equinix Presence in China to Support Demand for Global Expansion into High-Growth Economy
REDWOOD CITY, Calif. & HONG KONG–(BUSINESS WIRE)–
Equinix, Inc. (NASDAQ: EQIX – News), a provider of global data center services, today announced it has entered into a definitive agreement to acquire certain assets and operations of Hong Kong-based data center provider Asia Tone in an all cash transaction valued at $230.5 million. In total, Equinix gains five data centers and one disaster recovery center, in addition to one data center under construction, located across three key markets – Hong Kong, Shanghai and Singapore. Asia Tone serves a strategic customer base, which includes many existing Equinix customers.
“The acquisition of Asia Tone will be an important milestone in establishing market leadership for Equinix in Asia-Pacific,” said Steve Smith, president and CEO of Equinix. “As our fastest growing region for several years and one in high demand by customers, we see tremendous opportunity for growth. We are especially pleased to expand our footprint in China, which is highly desirable for multi-national customers looking to expand into this high-growth market.”
The transaction, which is expected to close in Q3 2012, will significantly expand Platform Equinix™ capacity in Asia, increasing Equinix’s global footprint to 104 data centers in 38 markets. Equinix gains high-quality data centers as well as experienced staff to meet strong demand from network, cloud, financial services and content customers in the Asia-Pacific market. As part of the deal, Equinix will gain a new facility in Shanghai that, when completed, will provide additional capacity of 80,000 square feet of data center space. This new Shanghai data center will support global customers looking to expand into the region and is expected to be available in the second half of 2012.
“Over the years, Asia Tone has provided colocation and data center services to support the needs of the world’s leading companies as they grow their business in Asia-Pacific,” said Charles Lee, CEO for Asia Tone. “Asia Tone’s footprint in Hong Kong, Shanghai and Singapore combined with Equinix’s global reach will better serve growing demand from global customers looking to expand in Asia.”
In a recent report, Frost & Sullivan found that the Asia-Pacific data center market earned revenues of more than US$2.55 billion in 2010 and estimates this to grow to US$9.25 billion in 2017. As one of fastest growing colocation markets in the world, China is the most requested market for Equinix customers looking to expand globally. Gartner estimates that China will become the second largest market in the world for data centers by 2015.
Asia Tone generated approximately $30 million in revenue in 2011, and has been growing at a greater than 50 percent CAGR for the past three years. The valuation paid is in-line with Equinix’s current 2012 adjusted EBITDA trading multiple based on projections for the business. The Asia Tone business is expected to be adjusted free cash flow positive in 2013, consistent with Equinix’s global objective.
J.P. Morgan acted as financial advisor to Equinix on this transaction.
Equinix, Inc. (NASDAQ: EQIX – News) connects businesses with partners and customers around the world through a global platform of high performance data centers, containing dynamic ecosystems and the broadest choice of networks. Platform Equinix connects more than 4,000 enterprises, cloud, digital content and financial companies including more than 700 network service providers to help them grow their businesses, improve application performance and protect their vital digital assets. Equinix operates in 38 strategic markets across the Americas, EMEA and Asia-Pacific and continually invests in expanding its platform to power customer growth. http://www.equinix.com.
Forward Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Factors that might cause such differences include risks and uncertainties associated with our acquisition of Asia Tone, including, but not limited to, the risks of international operations and the challenges of realizing expected synergies. We also face other general risks, including, but not limited to, the challenges of acquiring, operating and constructing IBX centers and developing, deploying and delivering Equinix services; unanticipated costs or difficulties relating to the integration of companies we have acquired or will acquire into Equinix; a failure to receive significant revenue from customers in recently built out or acquired data centers; failure to complete any financing arrangements contemplated from time to time; competition from existing and new competitors; the ability to generate sufficient cash flow or otherwise obtain funds to repay new or outstanding indebtedness; the loss or decline in business from our key customers; and other risks described from time to time in Equinix’s filings with the Securities and Exchange Commission. In particular, see Equinix’s recent quarterly and annual reports filed with the Securities and Exchange Commission, copies of which are available upon request from Equinix. Equinix does not assume any obligation to update the forward-looking information contained in this press release.
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Melissa Neumann, +1 650-598-6098
Lorraine Little-Bigelow, +852 2970 7742
GolinHarris for Equinix, Inc.
Liam Rose, +1 415-318-4380
Katrina Rymill, +1 650-598-6583
Jason Starr, +1 650-598-6020