US data centre provider Equinix acquires UK rival Telecity Group
29 May 2015
US data centre provider Equinix said today that it had struck a deal to acquire its smaller UK rival Telecity Group for about $3.6 billion in cash and stock.
The proposed transaction would end an all-share deal announced in February between Telecity and its European rival Interxion Holding.
Equinix, one of the world's largest providers of data centres, made a competing offer earlier this month (See: UK data center provider Telecity Group receives takeover bid from US rival Equinix).
Under the terms, Equinix would pay the equivalent of £11.45 a share in a combination of cash and shares, a 34.9-per cent premium to Telecity's closing price on 10 February, the day before the announcement of its planned alliance with Interxion.
Telecity is valued at £2.35 billion under the offer.
Stephen M Smith, Equinix president and chief executive, said in a news release that adding Telecity would ''considerably strengthen Equinix's offering to customers in Europe and beyond, reinforcing us as a global leader in global interconnection and data centers, as well as bringing the benefits of greater cloud and network density to our customers.''
London-based Telecity, operates data centres in 11 countries in Europe. Its shares were down less than 1 per cent to £10.89 in early trading on Friday in London.
On completion of the deal, Telecity shareholders would receive 572.5 pence a share in cash and 0.0327 of the combined company and they would own about 10.1 per cent of the combined company.
The acquisition of Telecity by Equinix, a deal which Reuters had reported yesterday would create the largest data centre player in Europe.
Deal activity in the sector is driven by players' plans to tap growing demand across new geographies for "cloud" technology, whereby the data and processing for devices like smartphones was carried out on millions of remote servers.
Equinix said, the approximate 1,145 pence per share deal represented a 27.3 per cent premium to the Telecity's closing price on 6 May, before announcement of talks, and that Telecity shareholders would receive 572.5p per share plus 0.0327 new Equinix shares.
Following completion Telecity executive chairman John Hughes would join the board of Equinix.
