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Equinix (EQIX) Commences Public & Senior Notes Offerings
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Global data center service provider Equinix Inc. (EQIX - Free Report) recently commenced a concurrent public offering of $1.9 billion of its common stock and $1.25 billion in principal amount of its senior notes, carrying an interest rate of 5.375% semi-annually. The notes will mature on May 15, 2027. Apart from this, the company will also provide a 30-day option to underwriters of equity offerings to purchase up to an additional $284.9 million of its common stock. Therefore, the company will be raising $3.435 billion in total with the equity and senior notes offerings.
J.P. Morgan Chase & Co. (JPM - Free Report) , Barclays plc (BCS - Free Report) , RBC Capital Markets, BofA Merrill Lynch, Goldman, Sachs & Co. and MUFG and TD Securities are acting as joint book-running managers, along with a few other lenders.
Equinix intends to use the entire proceeds from the aforementioned offerings, along with its existing term loan B borrowings of $1.053 billion, to fund the buyout of certain data center assets of Verizon Communications Inc. (VZ - Free Report) , and associated transaction fees and expenses. The remaining amount, if any, will be used for general corporate purposes.
Notably, the two companies entered into definitive agreement on Dec 6, 2016, under which Equinix agreed to acquire Verizon’s 24 data center sites, comprising 29 data center buildings across 15 metro areas, for a total cash consideration of $3.6 billion. The deal is likely to close by mid 2017.
Why Buyout Makes Sense for Equinix?
The addition of the aforementioned facilities will prove to be beneficial for Equinix for various reasons. First, the company will be able to expand its interconnection capabilities in the U.S. and Latin America. Per the company press release, the data center facility in Miami will be a key interconnection point and will help Equinix in expanding its services across Latin America.
Second, the transaction will open three new markets for Equinix – Bogota, Culpeper and Houston, thereby expanding its operations to 43 markets across five continents. Moreover, with the addition of 29 data center buildings, Equinix’s total number of data centers will be 175, spanning approximately 17 million square feet across the Americas, Europe and Asia-Pacific markets.
Third, the addition of new data centers is expected to help Equinix further expand its foothold in the enterprise segment. The 24 data center sites service roughly 900 customers, which according to the company includes a significant number of enterprises.
Last Words
Acquisitions remain one of the key growth strategies for Equinix. Expansion in important markets and consolidation of facilities in existing ones are important parts of Equinix's core strategy. The company consistently strives to boost its revenue base as well as profitability, by offering upgraded technology to clients. Moreover, the recurring revenue model has provided much-needed support to the company's revenue stream over the years. The company's cloud and IT service businesses are its fastest growing segments, and account for roughly one fourth of the total revenue.
Further, Equinix remains positive on the growing demand for data centers. To meet the rising demand for cloud services, this global interconnection and data center company is expanding its IBX data centers globally, and gaining popularity among tech companies looking for data management. Thus, the company expects its total addressable market for retail data centers to increase at a CAGR of 8% from 2013 to 2017 and reach $24 billion. Based on this, Equinix projects revenue growth rate of 10% through 2017.
By acquiring data center assets from Verizon, Equinix will be in a better position to capitalize on this opportunity. In addition, this deal will help the company in strengthening its global footprint and bring in additional revenues by adding approximately 900 customers.
Shares of Equinix have been steadily treading higher over the past one year. The stock generated a return of approximately 18.49% compared with the Zacks Reit-Equity Trust- Retail industry’s decline of 4.58%.
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Equinix (EQIX) Commences Public & Senior Notes Offerings
Global data center service provider Equinix Inc. (EQIX - Free Report) recently commenced a concurrent public offering of $1.9 billion of its common stock and $1.25 billion in principal amount of its senior notes, carrying an interest rate of 5.375% semi-annually. The notes will mature on May 15, 2027. Apart from this, the company will also provide a 30-day option to underwriters of equity offerings to purchase up to an additional $284.9 million of its common stock. Therefore, the company will be raising $3.435 billion in total with the equity and senior notes offerings.
J.P. Morgan Chase & Co. (JPM - Free Report) , Barclays plc (BCS - Free Report) , RBC Capital Markets, BofA Merrill Lynch, Goldman, Sachs & Co. and MUFG and TD Securities are acting as joint book-running managers, along with a few other lenders.
Equinix intends to use the entire proceeds from the aforementioned offerings, along with its existing term loan B borrowings of $1.053 billion, to fund the buyout of certain data center assets of Verizon Communications Inc. (VZ - Free Report) , and associated transaction fees and expenses. The remaining amount, if any, will be used for general corporate purposes.
Notably, the two companies entered into definitive agreement on Dec 6, 2016, under which Equinix agreed to acquire Verizon’s 24 data center sites, comprising 29 data center buildings across 15 metro areas, for a total cash consideration of $3.6 billion. The deal is likely to close by mid 2017.
Why Buyout Makes Sense for Equinix?
The addition of the aforementioned facilities will prove to be beneficial for Equinix for various reasons. First, the company will be able to expand its interconnection capabilities in the U.S. and Latin America. Per the company press release, the data center facility in Miami will be a key interconnection point and will help Equinix in expanding its services across Latin America.
Second, the transaction will open three new markets for Equinix – Bogota, Culpeper and Houston, thereby expanding its operations to 43 markets across five continents. Moreover, with the addition of 29 data center buildings, Equinix’s total number of data centers will be 175, spanning approximately 17 million square feet across the Americas, Europe and Asia-Pacific markets.
Third, the addition of new data centers is expected to help Equinix further expand its foothold in the enterprise segment. The 24 data center sites service roughly 900 customers, which according to the company includes a significant number of enterprises.
Last Words
Acquisitions remain one of the key growth strategies for Equinix. Expansion in important markets and consolidation of facilities in existing ones are important parts of Equinix's core strategy. The company consistently strives to boost its revenue base as well as profitability, by offering upgraded technology to clients. Moreover, the recurring revenue model has provided much-needed support to the company's revenue stream over the years. The company's cloud and IT service businesses are its fastest growing segments, and account for roughly one fourth of the total revenue.
Further, Equinix remains positive on the growing demand for data centers. To meet the rising demand for cloud services, this global interconnection and data center company is expanding its IBX data centers globally, and gaining popularity among tech companies looking for data management. Thus, the company expects its total addressable market for retail data centers to increase at a CAGR of 8% from 2013 to 2017 and reach $24 billion. Based on this, Equinix projects revenue growth rate of 10% through 2017.
By acquiring data center assets from Verizon, Equinix will be in a better position to capitalize on this opportunity. In addition, this deal will help the company in strengthening its global footprint and bring in additional revenues by adding approximately 900 customers.
Shares of Equinix have been steadily treading higher over the past one year. The stock generated a return of approximately 18.49% compared with the Zacks Reit-Equity Trust- Retail industry’s decline of 4.58%.
Equinix has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
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