Verizon completes $3.6 bn data center deal with Equinix

Verizon data centersData center company Equinix has completed the acquisition of 29 data centers from Verizon Communications for $3.6 billion in an all cash deal.

Equinix will get over 1,000 customers including over 600 new customers. Equinix will also gain from approximately three million gross square feet of data center space.

The acquisition will enable Equinix to accelerate relationships in the government and energy sectors. It will add three new markets including Bogota, Culpeper and Houston. Equinix will add capacity and get the opportunity for expansion in existing markets such as Atlanta, Denver, Miami, New York, Sao Paulo, Seattle and Silicon Valley.
Verizon deal - Equinix new MI1 data center site in Miami
The assets bring Equinix’s global footprint to over 175 International Business Exchange (IBX) data centers across 44 markets and approximately 17 million gross square feet.

Steve Smith, CEO, Equinix, said: “Companies are re-architecting their IT infrastructure to thrive in the digital new environment. They are moving from traditional centralized infrastructure to a distributed model that keeps data closer to the customers, partners and employees using it.”

Verizon will become a substantially larger customer following the close of the transaction and will remain a key partner of Equinix.

Approximately 250 Verizon employees, primarily in the operations functions of the 29 acquired data centers, have become Equinix employees.

Equinix plans to tether the new sites to existing Equinix IBX data centers within metros via Equinix’s interconnection products, thereby expanding Equinix’s core ecosystem value to customers in the newly acquired sites.

Why Verizon exited from Cloud

Verizon has sold the sale of its cloud and managed hosting business to IBM — exiting from the cloud market. In April 2016, Verizon shut down its public cloud compute services. Verizon will transfer virtual private cloud and dedicated private cloud services and customers, as well as its managed hosting business to IBM.

“This transaction is similar to AT&T executed with IBM in December 2015,” said Kelsey Mason, analyst at Technology Business Review.

Verizon exited from cloud business after re-launching its cloud portfolio numerous times. The main reason for the exit was its inability to compete against leaders such as Amazon Web Services (AWS) and Microsoft.

IBM will transition the equipment it will be purchasing from Verizon inside of the Verizon-owned data centers in EMEA and APAC and the now 29 Equinix-owned data centers in the Americas from Verizon IaaS to IBM Bluemix IaaS.

The immediate benefit, though, is gaining access to Verizon’s customer base, particularly in verticals where IBM is rapidly expanding its cognitive capabilities, like healthcare and financial services, and in harder-to-reach areas like the U.S. public sector.