Equinix Makes a Play for Telecity

May 7th, 2015 by · 1 Comment

The global carrier neutral data center market turned into a soap opera this morning, as Equinix made an unexpected offer to acquire TelecityGroup. TelecityGroup is of course has been busy preparing to merge with Dutch-based Interxion since their own deal was announced three months ago, but Equinix is arguing that it’s proposal would be a better idea.

In the Interxion deal, which had gained regulatory clearance in Germany already, TelecityGroup would hold 55% of the combined company in an all share merger. Equinix is offering some $3.5B in a combination of both cash and stock, which represents a 27% premium to where TelecityGroup had been trading with the Interxion deal on tap. The stock is up sharply in the UK, so the market definitely agrees with Equinix, and TelecityGroup says it has a responsibility to evaluate the merits of the offer. Telecity’s footprint would bring Equinix more depth in the major European markets, but also a new presence in cities like Dublin, Helsinki, Istanbul, Milan, Stockholm and Warsaw.

But I suspect that European regulators may be a bigger hurdle than TelecityGroup’s board and shareholders. Equinix is already a giant in Europe, and Telecity is perhaps its biggest pan-European competitor with Interxion just behind. While the Telecity/Interxion merger would create a European-based counterweight to the US-based Equinix, the scale advantage that a combined Equinix/Telecity entity would have relative to Interxion may give regulators some pause.

But that doesn’t mean that TelecityGroup’s shareholders won’t jump at the chance at the bigger payday. For Equinix, even if the deal didn’t go through it would have disrupted the merger with Interxion — which it probably would rather not see come to fruition. Unless of course they were able to buy both companies…  Nah.

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Categories: Datacenter · Mergers and Acquisitions

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  • Lars says:

    I completely agree with your assessment, Rob. This comes as a big surprise. An Equinix/Telecity merger would not only create a behemoth competitor in Europe, but I believe the combined entity would also control almost all of the region’s lucrative colo market for financial trading. I’d be surprised if regulators let this one go, but who knows.

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