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Equinix to acquire datacentre rival TelecityGroup for £2.35bn

Equinix's bid to acquire rival wins backing of the board, beating Interxion to the crunch

Equinix is to acquire fellow datacentre operator TelecityGroup for £2.35bn, resulting in the termination of an earlier merger bid by rival firm Interxion.

TelecityGroup initially agreed to merge with Interxion in February 2015, with the pair signing a non-binding agreement worth £2.2bn.

This deal was usurped by Equinix at the start of May 2015, which confirmed it had embarked on takeover talks with Telecity, with the view to acquire it for £11.45 per share – or £2.35bn.

Equinix’s deal has now won the approval of both firms’ boards, with TelecityGroup’s directors describing the offer as “fair and reasonable”. But it still requires sign-off from the company’s shareholders and regulatory clearance from the European Commission before it can proceed.

In a statement announcing the deal, Equinix said the merger would play an important part in the building out of its Europe-wide cloud ecosystem of services.

The firm already has datacentres in central London, Docklands and Slough, but the merger sees it expand its portfolio to include additional facilities in Dublin, Helsinki, Istanbul, Milan, Stockholm and Warsaw.

“The board of Equinix believes this transaction will provide the opportunity for increased network and cloud density to better serve customers,” the statement reads.

“The combined footprint of Equinix and TelecityGroup will create a stronger platform to attract customers and pursue the emerging enterprise opportunity.”

As part of the deal, TelecityGroup executive chairman John Hughes will join Equinix’s boards.

“Having carefully considered all our options, the board believes this is a compelling offer and an excellent outcome for shareholders, employees and customers,” said Hughes.

“Through this transaction, our customers will have new global opportunities for their connected datacentre requirements, and the combination of Equinix and TelecityGroup services and people will ensure the expanded business leads the way in the provision of highly-connected datacentre services for customers in Europe and all over the world.”

Meanwhile, Equinix CEO and president Stephen Smith said the merger will not only extend the global reach of its cloud platforms, but also the scale of them too.

“We believe our offer is compelling to TelecityGroup shareholders who will realise significant value for their holdings, while having the opportunity to participate in the future strengths of the combined business.”

Computer Weekly contacted Interxion for a comment on this story, and was directed to a statement from the company's CEO David Ruberg, who said it's business as usual for this firm.

“We continue to execute our communities of interest strategy with a disciplined investment approach focused on delivering strong returns," he said. 

"Our datacentres are among the most highly connected in 11 countries across Europe with regards to carriers, ISPs, and major cloud platforms.”

However, Nick Jones, partner and head of technology and telecoms at Cavendish Corporate Finance, said Interxion could soon find itself at the centre of another takeover bid before too long. 

"You would expect Equinix to be thinking hard now about further European consolidation with the for-now jilted Interxion perhaps returning as a target in the near future," said Jones.

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