Digital Realty Trust has acquired eight data centers in Europe from Equinix, which committed to selling the facilities last year as one of the conditions for regulatory approval of its $3.8 billion acquisition of the European data center giant TelecityGroup. The companies announced the deal Monday.
The acquisition, expected to close in the second half of this year, will instantly expand San Francisco-based Digital’s capacity in three major European data center markets. The company has agreed to pay about $874 million total for four Telecity data centers in London, two in Amsterdam, and one in Frankfurt, as well as one Equinix data center in London.
Digital has had data centers in London and Amsterdam, but Frankfurt is a new market the company has been eyeing for some time. Earlier this year it announced a land acquisition in Frankfurt where it plans to construct a three-building data center campus. Ownership of Telecity’s Lyonestrasse facility in Frankfurt and contracts with its tenants are likely to accelerate capacity take-up on the future campus as those existing customers look to expand in the market.
This Tuesday, Digital will join Dow Jones’s S&P 500, one of the most widely tracked stock market indexes, becoming the second company in the index focused solely on data center services. The other one is Equinix, which joined the index last year. Digital will replace Time Warner Cable, which is being acquired by Charter Communications.
Equinix’s blockbuster Telecity acquisition, which closed in January, radically changed data center market dynamics in Europe. By securing the deal, the Redwood City, California-based colocation provider instantly became the top data center provider in the region.
The acquisition disrupted an agreed-to but not yet closed merger between London-based Telecity and the Dutch data center provider Interxion, at the time two of Europe’s largest players. Had the merger gone through, it would have been nearly impossible for Equinix, or any other provider, to take the top spot in the European market in the future.
Digital, which historically focused on wholesale data center services, providing large chunks of data center capacity to the likes of Equinix (still one of its biggest customers), recently pivoted to a strategy that includes both wholesale and retail colocation services, competing more directly with Equinix. Last year it acquired Telx, one of Equinix’s biggest competitors in the US, in a deal that doubled its retail colo business.
Besides the acquisition of eight Equinix data centers by Digital, the companies also agreed on a binding option for Equinix to acquire a Digital facility in Paris, where Equinix leases and operates two data centers, for about $215 million. There’s no guarantee at this point that Equinix will exercise the option.
The portfolio Digital has agreed to buy contains about 213,000 square feet of data center space and 24.4MW of IT load total. About 650 customers are using the facilities, occupying 72 percent of available power, Digital said in a statement.
The portfolio also includes the potential to add another 15MW and close to 90,000 square feet of data center space in London and Amsterdam in the future.