Equinix (EQIX) Forays Into Africa With $320M MainOne Buyout
Equinix, Inc. EQIX announced the completion of its acquisition of the West African data center and connectivity solutions provider, MainOne, for an enterprise value of $320 million.
The acquisition marks a pivotal entry point for Equinix into the African market, with EQIX’s long strategy focused on becoming a leading African carrier-neutral digital infrastructure company, facilitating organizations to speed up digital transformation throughout the continent.
The acquisition of MainOne, headquartered in Lagos and founded by Funke Opeke in 2010, adds more than 64,000 gross square feet of space to Platform Equinix and 570,000 square feet of land for future expansions. Also, it includes an extensive submarine network extending 7,000 kilometers from Portugal to Lagos, Accra and along the West African coast, with landing stations in Nigeria, Ghana and Côte d'Ivoire.
The acquisition seems a strategic fit for Equinix as it offers an opportunity for the extension of its Platform Equinix into West Africa. Nigeria is Africa's largest economy and has the largest population with about 142 million active internet subscribers. Having new innovative digital ecosystems in fintech and content and digital media, the nation offers much scope for digital services expansion. Also, Lagos is rapidly becoming a major connectivity hub for the wider West Africa region.
Following the closure, MainOne will operate under a new brand – "MainOne, an Equinix company", while Funke Opeke will continue to lead under the new brand of "MainOne, an Equinix company."
Equinix remains well-poised to bank on the robust demand in the data center space globally with its Platform Equinix, which comprises 240 data centers across 66 metros and 27 countries on six continents.
The solid growth in cloud computing, the Internet of Things and big data and a greater call for third-party IT infrastructure are spurring demand for data center properties. Moreover, growth in the AI, autonomous vehicle and virtual/augmented reality markets is anticipated to be robust over the next five to six years.
Equinix is focused on tapping such growth opportunities with its expansion efforts. Recently, the company announced expansions in South America with its planned acquisition of three Entel data centers. Earlier, EQIX announced the acquisition of 13 Bell data centers in Canada and two highly interconnected data centers in Mumbai through the acquisition of GPX India.
However, the increased competition could prompt rivals to resort to aggressive pricing policies, making Equinix vulnerable to pricing pressure.
Shares of Equinix have rallied 11.4% in the past year, outperforming the real estate market’s growth of 7.5%. EQIX currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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