Equinix, Inc. (NASDAQ: EQIX) has announced plans to acquire MainOne, a data center and connectivity solutions provider in Africa. Equinix is a digital infrastructure company that provides collocation space and develops data center solutions.
The all-cash deal has an enterprise value of $320 million. Also, it is expected to close in the first quarter of 2022, subject to necessary closing conditions.
Equinix expects the acquisition to be accretive to its adjusted funds from operations. Further, the deal will help Equinix set foot in Africa with three operational data centers and an additional facility under construction, which is expected to open in the first quarter. (See Equinix stock price chart)
About 64,000 gross square feet of space will be added to Platform Equinix. The deal also includes an extensive submarine network extending 7,000 kilometers from Nigeria to Portugal and 1,200 kilometers of reliable terrestrial fiber network across southern Nigeria.
The President and CEO at Equinix, Charles Meyers, said, “MainOne’s leading interconnection position and experienced management team represent critical assets in our aspirations to be the leading neutral provider of digital infrastructure in Africa. Growth of data consumption in Africa is amongst the fastest in the world, and our customers are looking for a trusted partner to pursue the opportunities presented by broad mobile adoption and greater connectivity across the region.”
As per the agreed terms, the management team, including CEO Funke Opeke, will continue to serve their respective roles.
Last month, BMO Capital analyst Ari Klein maintained a Buy rating on Equinix. The analyst’s price target of $875 implies upside potential of 7.6% from current levels.
Klein noted, “While rising energy pricing has added some margin uncertainty for 2022, demand fundamentals are healthy, and we remain confident in EQIX’s long-term growth outlook. The business continues to scale, expand, and reach into opportunities that are additive to its TAM, which in our view are a reminder of EQIX’s premium position and differentiated approach.”
The Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 8 Buys, 4 Holds and 1 Sell. The average Equinix price target of $884.08 implies that the stock has upside potential of 8.8% from current levels.
EQIX Smart Score
EQIX scores a 9 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to outperform market averages.