Equinix Inc is part of a deal to purchase 90 per cent of ALOG Data Centers of Brazil SA, the firm announced Monday. The deal, pegged at $127 million, is Equinix’s foray into Latin America’s biggest economy. According to its announcement, the investment comes as part of Equinix’s strategy aimed at expanding its operations into the South America expanse.

Investors in the deal are Equinix and Riverwood Capital LLC. The deal was formally announced Tuesday. Riverwood Capital LLC is a private-equity firm. Under the terms of the investment, Equinix will gain controlling interest in ALOG, with that company's current management team retaining a 10 per cent stake.

Equinix is based in Redwood City, California and runs 92 data centers in the U.S., Europe and Asia that businesses use to store data and run programs. ALOG has data centers in Sao Paulo and Rio de Janeiro and is nearly finished building a third.

Equinix Chief Executive Steve Smith, said acquiring existing data centers presents a very efficient way to go into a market. According to Smith, building a new one can take over a year and cost more than $100 million in some cases.

Last year, Equinix acquired Switch & Data Facilities Co. Inc. for $683 million in cash and stock to expand its presence in major North American cities. Partly as a result of that deal, Equinix's 2010 revenue rose 38 per cent to $1.2 billion.

Commercial data centers, where businesses can store their own computer equipment or access data and programs on equipment owned by the facility operator, are gaining in popularity. Last month Verizon Communications Inc. said it would acquire data-center company Terremark Worldwide Inc. for $1.4 billion.

Mr. Smith said local laws make it expensive to import computer gear into Brazil, making third-party data centers an attractive option for businesses there. "Customers have been telling us that if you go to Brazil, we will follow you.

Over time, Equinix will have the option of buying out the other two shareholders, Mr. Smith said.

Equinix, Inc. is an American public corporation that provides carrier-neutral data centers and internet exchanges. Equinix provides network-neutral data centers (IBX or "Internet Business Exchange") and interconnection services. The company offers colocation, traffic exchange and outsourced IT infrastructure solutions to enterprises, content companies, systems integrators and nearly 600 network service providers.

15 Feb 2011.