US data centre giant Equinix has wasted no time in moving to fund its acquisition of Telecity Group after the takeover was cleared by the European Commission on 13 November.
US data centre giant Equinix (NASDAQ:EQIX) has wasted no time in moving to fund its acquisition of Telecity Group (LON:TCY) after the takeover was cleared by the European Commission on 13 November.
Banks are now offering US$750m in new Equinix common stock to help finance the US$3.6bn takeover, and there is the option of a US$112.5m greenshoe to take the issuance up to US$862.5m.
JP Morgan, BofA Merrill Lynch, Citigroup, RBC Capital Markets, Barclays and TD Securities are joint book-running managers, while ING, MUFG, HSBC,Evercore
Equinix also has plans to place a US$1bn senior secured bond and secure US$700m in senior secured term loans, which it will need to arrange before it closes the acquisition, expected in the first half of next year.
In addition to cash, stock will also be given to Telecity shareholders who will end up holding just over 10% of the combined group.
Clearance from the European Commission was a big hurdle to closing the deal, but Equinix won approval after offering remedies to quell Brussels’ competition concerns.
The EC was worried the tie-up would have eliminated an important competitor in data centre colocation and related services in Amsterdam, London and Frankfurt – markets where Equinix and Telecity currently compete.
Equinix has agreed to divest five data centres in London, two in Amsterdam and one in Frankfurt to allay the EC’s fears. Together, the data centres generate 4% of Equinix and Telecity’s combined revenue. On closing the company will operate 145 data centres.
Commissioner Margrethe Vestager, in charge of competition policy, said: “With the ever growing economic importance of ‘cloud’ services, it is crucial to maintain competition between data centres.
“The Commission is satisfied that the commitments offered by Equinix will ensure that companies continue to have a choice for hosting their data at competitive prices.”
Equinix made its move for Telecity in early May, scuppering the British group’s acquisition of Netherlands-based Interxion Holding that was agreed months earlier.
In September the Californian group also launched a cash offer via its Japanese subsidiary for all issued and outstanding shares of local rival Bit-isle for some Y33.3bn (US$280m) as it continues to bolster its global presence.