Equinix To Enhance Australian Presence With Metronode Buyout

It seems that Equinix Inc. (NASDAQ:EQIX) is firing on all cylinders to expand its data-center business across different regions. Yesterday the company announced a deal to buy Ontario Teachers' Pension Plan’s all the equity interests held in the Metronode group of companies for a total cash consideration of A$1.035 billion or approximately US$792 million. The transaction is anticipated to close by the end of the first half of 2018.

By leveraging Metronode’s sturdy local presence, Equinix will be able to further penetrate into the Australian and broader Asia-Pacific region, which is currently one of the fastest growing markets. Notably, Equinix currently generates approximately 21% of its revenues from the Asia-Pacific region.

The acquisition will add 10 data-center facilities to Equinix in Australia, in turn increasing its total number of IBX data centers to 15. Also, total number of IBX data centers across the Asia-Pacific region will reach 40.

Acquisitions have remained one of the key growth strategies for Equinix. The company remains optimistic on this rising demand for data centers. To meet the growing demand for cloud services, this global interconnection and data-center company has been expanding its IBX data centers globally and gaining popularity among tech companies looking for data management.

Therefore, the company anticipates its total addressable market for retail data centers to increase at a CAGR of 8% from 2013 to 2017, and reach $24.0 billion. Based on this projection, Equinix estimates a revenue growth rate of 10% through 2017.

Consequently, we believe by acquiring the Metronode data center, Equinix will be in a better position to capitalize on this opportunity. Moreover, the deal will help the company fortify its global footprint and bring in additional revenues. The latest buyout deal will also increase the company’s global data-center count to 200 across 52 countries.

Currently, Equinix carries a Zacks Rank #3 (Hold). Shares of the company have gained 28.1% year to date, significantly outperforming the industry’s 13.3% rally.

Some better-ranked stocks in the broader technology sector are Broadcom Limited (NASDAQ:AVGO) , NVIDIA Corporation (NASDAQ:NVDA) and Intel Corporation (NASDAQ:INTC) , all sporting a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Broadcom, NVIDIA and Intel have expected long-term EPS growth rates of 13.8%, 10.3% and 8.4%, respectively.

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