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Acquisitions
 9 Months Ended
Sep. 30, 2021
Business Combination and Asset Acquisition [Abstract]  
Acquisitions Acquisitions
2021 Acquisitions
Acquisition of GPX India (the "GPX India Acquisition")
On September 1, 2021, we completed the acquisition of GPX India, representing two data centers in Mumbai, India, for a total purchase consideration of approximately INR12.5 billion, or $170.5 million at the exchange rate in effect on that date. The GPX India Acquisition supports our ongoing expansion to meet customer demand in the Indian market.
2020 Acquisitions
Acquisition of Bell Data Centers (the "Bell Acquisition")
On October 1, 2020, we completed the acquisition of 12 data center sites across Canada from Bell, with one additional data center in Ottawa Canada acquired on November 2, 2020, for a total combined purchase consideration of approximately C$934.3 million, or $704.0 million at the exchange rates in effect on those dates. The acquisition supports our ongoing expansion to meet customer demand in Canada.
Acquisition of Packet (the "Packet Acquisition")
On March 2, 2020, we acquired all outstanding shares and equity awards of Packet Host, Inc. (“Packet”), a leading bare metal automation platform for a total purchase consideration of approximately $290.3 million in cash. In addition, we paid $16.1 million in cash to accelerate the vesting of unvested Packet equity awards for certain Packet employees, which was recorded as stock-based compensation expense during the three months ended March 31, 2020. In connection with the acquisition, we also issued restricted stock awards with an aggregated fair value of $30.2 million and a three-year vesting period, which will be recognized as stock-based compensation costs over the
vesting period. The acquisition, combined with Equinix MetalTM, is expected to accelerate our strategy to help enterprises deploy hybrid multicloud architectures on our data center platform.
Acquisition of data centers from Axtel (the "Axtel Acquisition")
On January 8, 2020, we completed the acquisition of three data centers in Mexico from Axtel S.A.B. de C.V. (“Axtel”) for a total purchase consideration of approximately $189.0 million, including $175.0 million in cash and $14.0 million we paid to the seller for recoverable value-added taxes ("VAT") incurred prior to the acquisition, which related to a corresponding VAT receivable acquired upon acquisition. The acquisition supports our ongoing expansion to meet customer demand in our Americas region.
Purchase Price Allocation
Each of these acquisitions constitute a business under the accounting standard for business combinations and, therefore, were accounted for as business combinations using the acquisition method of accounting. Under this method, the total purchase price is allocated to the assets acquired and liabilities assumed measured at fair value on the date of acquisition.
As of September 30, 2021, we had not completed the detailed valuation analysis to derive the fair value of assets acquired and liabilities assumed from the GPX India Acquisition, including property, plant and equipment, intangible assets and the related tax impacts; therefore, the purchase price allocation is based on provisional estimates and subject to continuing management analysis.
A summary of the allocation of total purchase consideration is presented as follows (in thousands):
GPX IndiaBellPacketAxtel
ProvisionalFinal
Cash and cash equivalents$9,406 $— $1,068 $— 
Accounts receivable4,399 — 5,098 — 
Other current assets 8,771 696 299 14,048 
Property, plant and equipment88,108 538,717 27,945 76,407 
Operating lease right-of-use assets62 14,359 1,519 1,646 
Intangible assets15,472 75,857 58,500 22,750 
Goodwill77,296 172,387 230,620 78,902 
Deferred tax and other assets20 722 138 — 
Total assets acquired
203,534 802,738 325,187 193,753 
Accounts payable and accrued liabilities(1,591)(895)(1,275)(238)
Other current liabilities(478)— (860)— 
Operating lease liabilities(62)(13,340)(1,519)(1,586)
Finance lease liabilities(20,565)(80,026)(27,945)— 
Deferred tax and other liabilities(10,373)(4,495)(3,290)(2,911)
Net assets acquired
$170,465 $703,982 $290,298 $189,018 
Property, plant and equipment - The fair values of property, plant and equipment acquired from these four acquisitions were estimated by applying the cost approach, with the exception of land, which we estimated by applying the market approach. The key assumptions of the cost approach include replacement cost new, physical deterioration, functional and economic obsolescence, economic useful life, remaining useful life, age and effective age.
Intangible assets - The following table presents certain information on the acquired intangible assets (in thousands):
Intangible AssetsFair ValueEstimated Useful Lives (Years)Weighted-average Estimated Useful Lives (Years)
GPX India:
Customer relationships$15,472 15.015.0
Bell:
Customer relationships75,857 15.015.0
Packet:
Trade names1,300 3.03.0
Existing technology5,100 3.03.0
Customer relationships 52,100 10.010.0
Axtel:
Customer relationships 22,750 15.015.0
The fair values of customer relationships acquired from these acquisitions were estimated from applying an income approach, by calculating the present value of estimated future operating cash flows generated from existing customers less costs to realize the revenue. We applied a discount rate of 11.0% for GPX India, 8.0% for Bell, 8.0% for Packet and 13.3% for Axtel, which reflects the nature of the assets as they relate to the risk and uncertainty of the estimated future operating cash flows, as well as the risk of the country within which the acquired business operates.
The fair value of the Packet trade name was estimated using the relief from royalty method under the income approach. We applied a relief from royalty rate of 1.0% and a discount rate of 8.0%. The fair value of existing technology was estimated under the cost approach by projecting the cost to recreate a new asset with an equivalent utility of the existing technology. The key assumptions of the cost approach include total cost, time to recreate and functional obsolescence.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed. Goodwill is attributable to the workforce of the acquired business and the projected revenue increase expected to arise from future customers after these acquisitions. Goodwill from the Bell, Packet, and Axtel acquisitions is attributable to our Americas region and goodwill from the GPX India Acquisition is attributable to the Asia-Pacific region. Goodwill from the Bell Acquisition is expected to be deductible for local tax purposes while goodwill from the GPX India, Packet and Axtel Acquisitions are not deductible for local tax purposes.
Revenues and net income and loss from operations
The operating results of the GPX India Acquisition are reported in the Asia-Pacific region following the date of acquisition. During the three and nine months ended September 30, 2021, our results of operations from the GPX India Acquisition were insignificant.
Transaction costs
During the nine months ended September 30, 2021, the transaction costs for the GPX India Acquisition were insignificant.