Following recent talks data center provider Equinix has announced a deal to pick up rival Telecity Group for about $3.6bn in cash and stock.
The agreement stops an all share deal announced in February with Interxion Holding, after the Redwood City-based Equinix leapt in with this competitive offer.
Under the terms, Equinix will pay the equivalent of £11.45 ($17.55) a share in a combination of cash and shares, a 34.9% premium on Telecity’s closing price the day before the planned alliance with Interxion was announced, valuing Telecity at £2.35bn.
"We are delighted to announce the combination of TelecityGroup and Equinix in what is an exciting day for the stakeholders of both companies,” said Stephen Smith, CEO and president of Equinix. “The addition of TelecityGroup's businesses will considerably strengthen Equinix's offering to customers in Europe and beyond, reinforcing us as a global leader in global interconnection and data centres, as well as bringing the benefits of greater cloud and network density to our customers.”
London based Telecity, operates data centers in 11 countries in Europe. Its shares fell less than 1%to £10.89 in early trading on Friday. If the deal is completed, Telecity shareholders will receive 572.5 pence a share in cash and 0.0327 of the combined company.
The board of directors of Telecity was expected to recommend that shareholders, who would own about 10.1% of the combined company, approve the Equinix deal.
“Having carefully considered all our options, the board believes this is a compelling offer and an excellent outcome for shareholders, employees and customers,” said John Hughes, the Telecity executive chairman.
“We are especially pleased to be welcoming John Hughes onto the Board of the combined business and will greatly benefit from his experience in the technology space,” Smith commented.
The deal, which is subject to regulatory approval, is expected to close in the first half of next year. Mr. Hughes would become an Equinix director after the completion of the transaction.