Equinix (Nasdaq: EQIX) sees South America as the next region for data center growth, and to get there it has partnered with Riverwood Capital to buy a 90 percent stake in Brazil-based ALOG Data Centers for about $127 million.
Under the terms of the agreement, Equinix will hold the majority interest in the company, while Riverwood will hold a significant minority stake with the remaining 10 percent owned by ALOG's current management team. During the first three years after the deal closes, Equinix has the option to purchase 100 percent of ALOG.
By making this deal, Equinix instantly gains a significant data center presence in the Latin American market with a footprint of 95 data centers across 37 markets.
"ALOG's strong position in Brazil coupled with a complementary business model give us the opportunity to enter this important emerging market and quickly accommodate our customers' demands for data center services in South America," said Steve Smith, President and CEO of Equinix.
ALOG itself appears to be on the move as well. Already serving about 1,000 customers in its two data centers in Sao Paulo and Rio de Janeiro, ALOG plans to open a third data center in Tamboré (a suburb of Sao Paulo) in March. When combined, the three ALOG data centers will have a total of over 67,000 square feet of data center space.
Given the ongoing growing presence of Latin American-based traditional incumbent service providers and other competitive global carriers such as NTT America (NYSE: NTT) and Global Crossing (Nasdaq: GLBC), the addition of the ALOG assets will enable Equinix to meet its multi-location customer needs versus losing that business to a competitor.
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