US data centre group Equinix has formalised its £11.45 per share offer to investors in Telecity Group and the board of its British rival have accepted the £2.35bn (US$3.6bn) offer. Telecity had been in the process of acquiring Dutch…
US data centre group Equinix has formalised its £11.45 per share offer to investors in Telecity Group and the board of its British rival have accepted the £2.35bn (US$3.6bn) offer.
Telecity had been in the process of acquiring Dutch contemporary Interxion Holding for US$2.2bn, but the parties have terminated the all-stock deal in light of Telecity’s sale to Equinix.
The Interxion transaction was agreed in February, but thrown into disarray in early May after Equinix made its initial approach to Telecity.
Under the terms of Equinix’s takeover, shareholders in Telecity will receive 572.5p and 0.0327 shares in the combined group for each of their shares. Following completion of the deal, expected H1 2016, Telecity shareholders will hold just over 10% of the combined group.
Equinix said its board believes the tie-up “will provide the opportunity for increased network and cloud density to better serve customers”.
“The combined footprint of Equinix and TelecityGroup will create a stronger platform to attract customers and pursue the emerging enterprise opportunity.
“Equinix expects the transaction to enable accelerated deployment of cloud service provider nodes and to further the execution of Equinix’s cloud ecosystem strategy for EMEA.”
Had Equinix not made this move, it would have been confined to a distant number two spot in Europe, competing with Telecity-Interxion on both sides of the Atlantic, Jefferies analyst Milan Radia previously told TelecomFinance. He argued that therefore it made perfect sense for Equinix to buy Telecity.
Another equity analyst told TelecomFinance that the deal would be “great” for Telecity, since the combination with Equinix would be powerful, albeit expensive. The analyst suggested the Equinix takeover offered a better short-term gain for Telecity shareholders than a deal with Interxion.
“Given the rapid acceleration of M&A in the space, Equinix probably saw this as a last opportunity to grab significant market share,” the analyst said, adding that while it was bad in the short-term for Interxion, there would likely be future M&A opportunities.
Equinix is being advised by JP Morgan. Telecity’s advisers are Goldman Sachs, Oakley Capital, Barclays and Greenhill & Co. Meanwhile, Perella Weinberg advised Interxion on its sale to Telecity.
