Equinix, Inc. (Nasdaq: EQIX), a provider of global data center services, and Riverwood Capital, a technology-focused private equity firm, today announced that they have entered into a definitive agreement to acquire approximately 90 percent of ALOG Data Centers of Brazil S.A. in an all cash transaction valued at approximately $127 million. Equinix will hold controlling interest, Riverwood will hold a significant minority stake and approximately 10 percent will be held by current members of ALOG’s management team. Beginning three years following the close of the transaction, Equinix has the right, and in certain circumstances may be required, to acquire 100 percent of ALOG.
The investment will extend Platform Equinix to South America, creating a footprint of 95 data centers across 37 global markets. Data center space in Brazil gives Equinix the ability to satisfy strong demand from its network, content, cloud and financial services customers looking to establish a presence in this rapidly growing market.
“Our investment in ALOG further strengthens Equinix’s position as the most comprehensive global data center provider in the world,” said Steve Smith, President and CEO of Equinix. “ALOG’s strong position in Brazil coupled with a complementary business model give us the opportunity to enter this important emerging market and quickly accommodate our customers’ demands for data center services in South America.”
ALOG is among the leading carrier-neutral data center services providers in Brazil and serves approximately 1,000 customers across its two data centers in Sao Paulo and Rio de Janeiro. The company is currently expanding its footprint to include a third data center in Tamboré (a suburb of Sao Paulo), which is on track to deliver Phase 1 capacity by March 2011. Combined, the three ALOG data centers will total approximately 67,000 square feet of data center space.
Sidney Breyer, CEO of ALOG, will continue to lead the ALOG team in Brazil with the support of Equinix and Riverwood. “For more than a decade, ALOG has provided data center services to support the needs of the world’s top corporations in Brazil,” said Breyer. “These businesses rely on ALOG to connect and safeguard their mission-critical applications. The combination of ALOG’s footprint in Brazil and Equinix’s global reach will better serve growing worldwide demand for data center services.”
According to JP Morgan, by the end of this decade Brazil is expected to become the world’s fifth largest economy. Gartner estimated that Brazil’s total end-user IT spending would reach $101.3 billion in 2010, representing 9.6 percent of its real gross domestic product (GDP), and named Brazil the second-largest IT market within emerging economies after China.
“This investment prudently capitalizes on the significant growth in the demand for IT infrastructure and services in Brazil,” said Francisco Alvarez-Demalde, a founding Partner of Riverwood Capital. “We are very excited about partnering with ALOG and Equinix, combining ALOG’s strong management team and leadership in Brazil, with the Equinix brand and global platform, and our expertise in growing technology businesses in Latin America.”