Equinix's $3.6 billion buy of Telecity hints at more data-center deals

NEW YORK (TheStreet) --Equinix's (EQIX) recent $3.6 billion offer for British data-center provider Telecity Group (TLEIY) marks another sign of a buyout binge brewing in the data center industry -- to the point that some companies might feel pressured to make deals they would otherwise avoid.

The move by Equinix, based in Redwood City, Calif., is viewed by some industry observers as a sign that the sometimes sleepy data center industry is open for a potential slate of buyouts, similar to that in the semiconductor sector. Intel (INTC) announced Monday plans to acquire Altera   (ALTR) for $16.7 billion and Avago Technologies (AVGO) last week struck the largest semiconductor buyout deal for Broadcom (BRCM).

"It [the data-center industry] is consolidating as is much of the tech market," said Rob Enderle of the Enderle Group. "Firms are flush with cash and appear to be going on a buying spree to improve or consolidate market positions."

Equinix operates data-center services in 15 countries on five continents and in March announced it will open five new data centers in New York, London, Melbourne, Toronto and Singapore. Telecity, meanwhile, is strong in Europe, where its services can be found in 11 countries.

Enderle, however, noted the Equinix-Telecity deal had a particular angle to it. "This one was also to undo a prior acquisition attempt with Interxion (INXN)," he explained.

If you liked this article you might like

How Hurricane Harvey Is Affecting Customers of Comcast, AT&T and Charter

What to Watch During the Week: Cramer's 'Mad Money' Recap (Friday 7/7/17)

This Huge Trend Is Boosting Shares of Cloud Infrastructure Company Equinix

Cramer: These Sectors Look Bullish (Part III)

Cramer: There Are Powerful Themes in Several Bull Markets