The consolidation story in the European colocation world just entered a new, fascinating chapter this morning. Three weeks after making a play to derail the Telecity/Interxion merger and acquire Telecity Group for itself, Equinix has won major battle. Telecity this morning has agreed to their offer of £2.35B ($3.6B).
Telecity’s three dozen data centers across 9 European markets fit quite well with Equinix’s own footprint, taking it into some new markets while offering greater depth in some of the biggest ones. Telecity did about €470M and €221M in annual revenues and EBITDA in 2014, which will boost Equinix’s business by some 20% or so. The consensus seems to be that Equinix is getting a good deal here, a circumstance that has perhaps been helped along by the recent strength of the dollar over the euro.
The deal terminates the proposed all-share combination between Telecity and Dutch-based Interxion, which had been announced back in February. Interxion was the smaller partner in that deal, and likely doesn’t have the firepower to compete with its larger US-based rival in a bidding war for Telecity. However, we will just have to see if the story is really over.
There aren’t that many pan-European, carrier-neutral colocation footprints of this scale, and having the US-based Equinix in possession of that much of it could cause a few of the continent’s regulatory heads to turn. It’s a competitive industry and there’s plenty of levers to keep Equinix in check, but where data is stored and processed has been of increasing political interest in Europe in recent years.
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