Equinix Confirms $3.55B Bid for UK's Telecity

An Equinix takeover of Telecity would create Europe's biggest data center player, but it might scupper Telecity's own move for Dutch player Interxion.

Iain Morris, International Editor

May 8, 2015

2 Min Read
Equinix Confirms $3.55B Bid for UK's Telecity

US data center business Equinix has confirmed it is in talks about a possible £2.3 billion (US$3.55 billion) takeover of Telecity, a smaller player based in the UK.

A tie-up between the two companies would give rise to the biggest data center company in Europe, according to analysts cited in a Reuters report, but could also scupper TeleCity plc (London: TCY)'s move for Interxion -- another data center business based in the Netherlands -- announced three months ago.

Indeed, in a statement Equinix Inc. (Nasdaq: EQIX) said a takeover of Telecity "would create a more compelling combination than the proposed merger with Interxion Holding and would deliver greater value for TelecityGroup shareholders."

The move would allow Equinix to extend its footprint in Europe and add capacity at several locations where it already has facilities, said the company.

Telecity's share price soared 20% on the London Stock Exchange Thursday after the UK business revealed it was in negotiations with Equinix, while Interxion's stock fell by 4.3% on the New York Stock Exchange.

According to Telecity, Equinix would pay 54% of the fee in cash and the remaining 46% in Equinix stock, offering £11.45 (£17.68) per Telecity share -- a 27.3% premium to Telecity's closing share price on May 6 and about 5% higher than its price on the London Stock Exchange Friday afternoon.

Equinix said it had until June 4 to announce a firm intention to make an offer for Telecity.

Telecity's February bid for Interxion valued that business at approximately $2.2 billion and would see Telecity offer 2.3386 new shares for each share in the Dutch company.

For more data center-related coverage and insights, check out this dedicated content channel here on Light Reading.

Interxion has defended its agreement with Telecity as one that would create a "strategically compelling combination" but noted that "TelecityGroup's entrance into discussions with Equinix releases Interxion from its exclusivity obligations with TelecityGroup during the pendency of the discussions."

Equinix's move came in the same week that Telecity reported underlying revenue growth of 9.6% for the first three months of 2015 (on a year-on-year basis) and confirmed it was on track to grow revenues by 8-10% this year.

Telecity reported revenues of £348.7 million ($538.5 million) in 2014 -- 7.1% more than in 2013 -- and saw adjusted profit after tax rise by 7.3%, to £79.7 million ($123.1 million).

Equinix, meanwhile, generated $643.2 million in revenues in the January-to-March quarter, representing growth of 1% compared with the same period of 2014, while income from operations rose by 18%, to $151.4 million, over the same period.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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