Equinix buys data centre rival Telecity for £2.35bn

Equinix buys data centre rival Telecity for £2.35bn

Telecity, the UK firm that operates high-speed data centers for Spotify and Facebook, has been purchased by an American rival for £2.35bn, scuppering its plans to create a European powerhouse.

The recommended bid by US team Equinix comes 90 days after Telecity had agreed a £2.3bn merger with Netherlands-based Interxion which would have created one of the world’s biggest data centres.

• Data group crashes Telecity’s merger plans

Nonetheless, Equinix has effectively gatecrashed that deal by trumping it with a higher offer of £11.45-a-share, a 27.3pc premium to Telecity’s closing price before talks had been announced.

As due to calling off the merger Interxion will be due a £15m break fee from Telecity, but Equinix has softened the blow by saying it will probably pay Telecity £50m if its deal falls apart.

Data centers are competing to react to customers’ demand for brand new internet services and storage, which is booming on the back of cloud technology that is needed for streaming music and videos online from millions of remote servers to smartphones.

 “Having carefully considered all our options, the board believes that is a compelling offer and an excellent result for investors, employees and customers”, said Mr Hughes.

Telecity is without a permanent chief executive following Michael Tobin’s abrupt resignation in October after 10 years in charge.

Nonetheless, Mr Tobin, who was simply responsible for growing the business enterprise through acquisitions, stands to gain around £7.9m from the Equinix takeover as he still owns a 0.3pc stake within the London-listed company.

“Equinix is unquestionably getting this for a good price offered the strategic fit and the strategic value of Telecity’s network hubs,” said Milan Radia analyst at Jefferies. The US team refused to comment on synergy estimates from the deal

 Equinix was moved to make a competing offer to achieve control of Telecity’s data centers in central London as well as the Docklands that offers traders links to New York within 30 miliseconds.

“We also realised the benefits of entering markets in Dublin, Helsinki, Stockholm, Munich and Eastern Europe which would expand our impact in growing markets,” said Eric Schwartz, Equinx’s president of Europe, Middle East and Africa.

Equinix, which was founded in 1998, operates significantly more than 100 data centres in 33 markets in five continents. Stocks in Telecity rose to an all-time extreme to 1,084p in early morning trading on Friday. Equinix chief executive Stephen Smith said it absolutely was an “exciting day” for both companies.

The US firm also announced that Telecity’s executive chairman John Hughes would join the board of Equinix when the deal ended up being completed.


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