US data centre operator Equinix (NASDAQ:EQIX) has launched a cash offer via its Japanese subsidiary for all issued and outstanding shares of local rival Bit-isle (TYO:3811) for some Y33.3bn (US$280m).
The price represents 9.8x Bit-Isle’s FY2015 EBITDA, which according to Wells Fargo analyst Jennifer Fritzsche, is “well below [Equinix’s] average past multiple paid of 11-12x”.
For the deal to succeed, at least 66.6% of Bit-isle shareholders must accept the Y922 per share offer during the initial 9 September to 26 October offer period, which may be extended. Equinix would then launch a squeeze-out complying with Japanese corporate law, with a view to completing the acquisition by early 2016.
Bit-isle’s board of directors has endorsed the offer, while leading shareholders Warehouse Terrada, Bit-isle CEO Kohei Terada and Warehouse Terrada chairman Yasunobu Terada, have agreed to tender their shares, together representing a stake of 29.74%.
Equinix said the deal would create Japan’s fourth-largest player, with 12 data centres in Tokyo and Osaka, while also strengthening its position in Asia Pacific.
The Bank of Tokyo-Mitsubishi has committed to providing a one-year senior bridge term loan facility to fund the acquisition, Equinix stated. The company says it services 33 markets globally.
In the UK, Equinix has agreed to buy local rival Telecity Group for £2.35bn (US$3.6bn), interrupting a previously agreed acquisition by the target of Dutch contemporary Interxion.
Equinix has a market cap of US$15.37, its share price having risen 31% over the last year.
For the full year ended 30 April, Bit-isle reported revenue of Y18.3bn and debt of Y21.9bn, according to Capital IQ.
