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Equinix clinches rare tech deal with Chinese seller

by Chris Nolter  |  Published May 1, 2012 at 4:06 PM
equinix.jpgEquinix Inc. continued to enhance its presence in developing markets Tuesday, May 1, with the $230 million purchase of data centers and other operations in China from Asia Tone Ltd.

The Redwood City, Calif., company is buying five data centers, a disaster recovery center and another facility that is under construction. The properties are in Hong Kong, Shanghai and Singapore.

Equinix already has its regional headquarters in Hong Kong. The Asia-Pacific business generated $215 million, or about 14% of Equinix's $1.6 billion in 2011 revenue, and is the company's fastest-growing unit.

The deal would be the largest U.S. "inbound" acquisition of a Chinese technology company since Berkshire Hathaway Inc.'s September 2008 purchase of a nearly 10% stake in electric car and green-tech company BYD Co. Ltd. for $232 million, according to Dealogic. It would be the largest U.S. acquisition in the country since Caterpillar Inc.'s $894 million purchase of ERA Mining Machinery in November 2011, according to the financial analytics firm.

Equinix said the valuation is "in line" with its own 2012 trading multiple, which Wells Fargo Securities LLC puts at 11.5 times Ebitda for the current year.

The Asia Tone purchase is in the vein of Equinix's 2011 acquisition of a stake in Alog Data Centers do Brasil SA.

At a conference earlier this year, Equinix CEO Stephen Smith said the company would look for "bolt-on-type acquisitions that supplement us in a market that we know we need to be in," similar to the Alog deal. Specifically, Smith said the company wanted "to figure out China, India, and some of the critical markets that we're not in today."

Equinix received advice from J.P. Morgan Chase & Co. The bank's U.S. team included Fred Turpin, Marco Caggiano, Andrew Verdasca, Marc Giammatteo, Hector Fernandez, King Leung and Michael Biblowit. In Asia were Tim Fletcher, Sanjeev Malkani, Jason Banh and Damien Niam.

The buyer expects to close the deal in the third quarter.
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Tags: Alog Data Centers do Brasil SA | Andrew Verdasca | Asia Tone Ltd. | Berkshire Hathaway Inc. | BYD Co. Ltd. | Caterpillar Inc. | Damien Niam | Dealogic | Equinix Inc. | ERA Mining Machinery | Fred Turpin | Hector Fernandez | J.P. Morgan Chase & Co. | Jason Banh | King Leung | Marc Giammatteo | Marco Caggiano | Michael Biblowit | Sanjeev Malkani | Stephen Smith | Tim Fletcher | Wells Fargo Securities LLC

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