Amazon in talks to build three Israel data centers for NIS 1b

AWS

Azrieli and its partner Compass have bid to build and lease out the data centers to Amazon and have options on three lots for the purpose.

Tech giant Amazon is in talks to set up data centers in three locations in Israel, sources inform "Globes." Each Amazon Web Services (AWS) data center would consume 16 megawatts, more than all the data centers already operating in Israel. Amazon seems to be following in the footsteps of Microsoft and Oracle, which are setting up data centers in Israel.

Amazon has been in talks on the matter with Azrieli Group Ltd. (TASE: AZRG) and US company Compass. However, Amazon may have decided to issue a tender to receive bids from other players. The process is being overseen by Amazon's European office.

"Globes" has also learned that income producing real estate company Azrieli is moving forward with the venture and is holding talks to acquire three sites near Beit Shemesh, Shoham and Emek Hefer for the data centers. The real estate deals are worth a combined NIS 300-400 million and the entire deal with construction of the data centers would be worth NIS 1 billion.

Azrieli is current examining the suitability of the land on the three sites for data centers - for example the electricity infrastructures. If Amazon does decide to go with Azrieli, and if the land is suitable, then Azrieli will realize its options to buy the three sites.

Azrieli declined to comment on the report and Amazon said that it does not comment on rumor and speculation.

Although Azrieli focuses mainly on shopping malls and office developments, it entered the data centers sector last year in order to create a new engine of growth in the income producing real estate sector. To do so Azrieli formed a partnership with US company Compass Holdco, which specializes in setting up data centers.

In July 2019, Azrieli announced it was acquiring 20% of Compass for $135 million. Azrieli and Compass submitted a join bid to Amazon in which the partnership would invest hundreds of millions of shekels in building the data centers. Azrieli has a market cap of NIS 20 billion, down 35% this year as it feels the effects of the Covid-19 crisis.

Published by Globes, Israel business news - en.globes.co.il - on August 2, 2020 © Copyright of Globes Publisher Itonut (1983) Ltd. 2020

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