Google uses language and cc tlds to localize sites. The location of inbound linking sources also appears to be a major factor. I'd also recommend localizing the content... local addresses, spellings, etc... in other words, some content differentiation.
Hosting probably is not high on the list, but, depending on other factors, may enter into how Google assigns localization.
Design doesn't matter.
For further discussion, check the Google Search forum's Hot Topics [webmasterworld.com] section, which is always pinned to the top of that forum's index page. You'll find some helpful threads in a section called "GEO-TARGETED SEARCH."
Here are a couple of threads in particular that might be of help...
Linking a .ca to a .com with same content
Duplicate Content on Localised Search
Bing undoubtedly has some different considerations.