Equinix buys Telecity for £2.3bn - after Telecity ditches Interxion deal
UK data centre operator snapped up by acquisitive US rival - dropping Interxion takeover in the process
US data centre operator Equinix is to acquire UK rival Telecity in a deal valuing the iconic British company at £2.35bn, a move that comes months after Interxion had agreed to be acquired by Telecity.
Equinix's keeness to acquire Telecity was reflected in the 35 per cent premium that it was prepared to pay for Telecity against the closing stock price in February after Telecity had concluded and announced the Interxion deal - and a 27 per cent premium on the company's closing price at the beginning of May, before talks between Telecity and Equinix had been disclosed.
It comes as data centre operators large and small rush to expand their facilities as companies open up to both outsourcing and co-location of hardware, as well as cloud computing.
"The addition of TelecityGroup's businesses will considerably strengthen Equinix's offering to customers in Europe and beyond," said Equinix CEO Stephen Smith.
"We are not surprised there have been a few twists and turns in this tale. Scale (in terms of facilities, capabilities and geographical coverage) is of course paramount for data centre providers, and serious opportunities to improve that must not be overlooked. For Equinix, the addition of Telecity extends its presence in Europe and increases its cloud capabilities," said TechMarketView analyst Kate Hanaghan.
Telecity was founded in April 1998 when it opened its first data centre in Manchester. Today, it operates 37 data centres across Europe, including eight in London, four in Manchester, as well as in Paris, Helsinki, Dublin, Amsterdam, Milan and Frankfurt. It achieved revenues of £348.7m in 2014, and an operating income of £90m.
Nasdaq-listed Equinix, in contrast, enjoyed revenues of $2.44bn in 2014, but a net loss of $259.5m. Its customers include Amazon Web Services, IBM SoftLayer, Salesforce.com, eBay, NTT and BT.
Following completion of the deal, which is expected in the first half of 2016, Telecity Group shareholders will hold 10.1 per cent of Equinix, while Telecity executive chairman John Hughes will join the board of Equinix.