Equinix to Buy Data Center Rival Telecity for $3.6 Billion

29 May 2015 | Author: | No comments yet »

Equinix to Buy Data Center Rival Telecity for $3.6 Billion.

LONDON — The American data center provider Equinix said on Friday that it had struck a deal to acquire its smaller British rival Telecity Group for about $3.6 billion in cash and stock. Equinix Inc. agreed to buy Telecity Group Plc for 2.35 billion pounds ($3.6 billion) to create a trans-Atlantic data-center operator, scuttling the U.K. company’s planned merger with Interxion Holding NV. Under the terms, Equinix would pay the equivalent of 11.45 pounds, or about $17.55, per share in a combination of cash and shares, — a 34.9 percent premium to Telecity’s closing price on Feb. 10, the day before its planned alliance with Interxion was announced.

Smith, the 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.” Telecity, which is based in London, operates data centers in 11 countries in Europe. Data-center companies are exploring mergers as consumers and companies use more of their services to store information remotely and access it on mobile phones, tablets and computers. “Equinix is definitely getting this for a good price given the strategic fit and the strategic value of Telecity’s network hubs,” Jefferies LLC analyst Milan Radia said in an interview. Following the transaction, Telecity shareholders would own about 10.1 percent of the combined company. “Having carefully considered all our options, the board believes this is a compelling offer and an excellent outcome for shareholders, employees and customers,” Mr.

The deal adds to a surge in offers for U.K. technology and telecommunications equipment this year as buyers take advantage of Britain’s relatively low tax rates. The amount buyers have agreed to spend so far for companies in the industry has more than doubled in deals announced so far this year, according to data compiled by Bloomberg.

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