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Equinix to buy Telecity for US$3.6 billion, ending Dutch deal
[AMSTERDAM] Equinix Inc agreed to buy Telecity Group Plc for 2.35 billion pounds (S$4.8 billion) to create a trans- Atlantic data-centre operator, scuttling the UK company's planned merger with Interxion Holding NV.
Equinix is paying a mixture of cash and stock that equals 1,145 pence a Telecity share in a deal recommended by the target's board, the companies said Friday. That's 5 per cent more than the stock's latest closing price in London. The shares traded at 1,084 pence in London at 09:01 am Friday.
Equinix, based in Redwood City, California, is paying a mixture of cash and stock that equals 1,145 pence a Telecity share, the companies said in a statement Friday. That's 5 per cent more than the stock's latest closing price in London. Telecity's board is recommending the offer.
The deal means Telecity's planned combination with Interxion of the Netherlands will be terminated. Equinix first approached London-based Telecity early in May, two months after Telecity agreed to merge with Interxion. Data-centre 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. Telecity is coming off of a period where customers reduced the capacity they were taking from the business, he said.
An Interxion representative could not be immediately reached for a comment.
Equinix fell 0.3 per cent to US$269.19 in New York on Thursday as Interxion added 1.2 per cent to US$31.21.
The deal adds to a surge in offers for UK 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.
Suwanee, Georgia-based Arris Group agreed to buy Pace Plc, a TV set-top box maker from Yorkshire, for US$2.1 billion in April. Qualcomm Corp agreed the purchase of the UK's CSR Plc in October in a deal expected to be completed this summer.
Telecity's operations range from Dublin to Sofia and Istanbul to Stockholm. Equinix works in the US, Canada, Brazil, several countries in Europe and Asia, the United Arab Emirates and Australia.