Equinix may seek more deals after agreeing to buy Telecity for £2.35bn

Equinix is creating a transatlantic data centre operator

Data centre: Data centre providers are merging as consumers and companies use more of their services to store information remotely and access it on mobile phones, tablets and computers. Photograph: Getty Images/iStockphoto

Data centre: Data centre providers are merging as consumers and companies use more of their services to store information remotely and access it on mobile phones, tablets and computers. Photograph: Getty Images/iStockphoto

 

Equinix said it may seek more deals after agreeing to buy Telecity for £2.35 billion (€3.27 billion). Equinix is creating a transatlantic data centre operator, scuppering its target’s planned merger with Interxion.

“When we thought about this deal structure, the consideration was balancing our capital structure and allowing us to maintain some strategic and operational flexibility,” chief financial officer Keith Taylor said. “We’ll have the flexibility to some degree to think about what else is out there.”

The California-based company is paying a mixture of cash and stock that is equal to 1,145 pence per Telecity share in a deal recommended by the UK company’s board. That’s 5 per cent more than the stock’s closing price on Thursday.

Data centre providers are merging as consumers and companies use more of their services to store information remotely and access it on mobile phones, tablets and computers. Equinix first approached London-based Telecity in May, two months after Telecity agreed to merge with Interxion.

Telecity shares fell 1.1 per cent to 1,078 pence in London on Friday.

“Equinix is definitely getting this for a good price, given the strategic fit and the strategic value of Telecity’s network hubs,” Jefferies analyst Milan Radia said. Telecity is coming out of a period where customers reduced the capacity they were taking from the business, he said.

Equinix’s churn has been at the same level for the past few quarters, said Erik Schwartz, its head of Europe, Middle East and Africa.

Interxion spokesman Jim Huseby declined to comment beyond confirming the end of the deal. If Equinix’s agreement is terminated, it would have to pay Telecity £50 million. Equinix plans to operate globally and Telecity gives it a presence in new markets, including in Ireland. – (Bloomberg)