Equinix Pushes Into Europe, Enticing Telecity Away From Interxion

NEW YORK (The Deal) -- Redwood City, Calif.-based data center operator Equinix (EQIX) on Friday unveiled a £2.3 billion ($3.5 billion) cash-and-stock offer for the United Kingdom's TelecityGroup, unplugging a previous offer by its target for the Netherlands' Interxion Holding (INXN).

Equinix plans to offer 1,145 pence per TelecityGroup share, including 572.5 pence in cash and 0.0327 Equinix shares for each TelecityGroup share.

The offer is a 27.3% premium to TelecityGroup's close on May 6, the day before Equinix disclosed talks with the company, and is a 34.9% bonus to the target's closing price on Feb. 10, the day before TelecityGroup announced its original deal with Interxion Holding.

The agreement will create Europe's biggest data center operator and give about 10% of the expanded company to TelecityGroup shareholders. Data center operators are eager to gain heft as European economies recover and companies increasingly rely on cloud services, which allow users to tap data, documents and even programs on any device over the Internet.

"The addition of TelecityGroup's businesses will considerably strengthen Equinix's offering to customers in Europe and beyond, reinforcing us as a global leader in global interconnection and data centers," Equinix Chief Executive Stephen Smith said in a statement.

TelecityGroup shares slid 1.50 pence to 1,088.50 in morning London trading.

The TelecityGroup deal will allow Equinix to bolster existing European operations in locations such as London while allowing for expansion into other major cities such as Dublin, Ireland; Helsinki, Finland; Istanbul, Turkey; Milan, Italy; Stockholm, Sweden; and Warsaw, Poland.

Equinix's offer is in keeping with analyst predictions that the London-based data center operator was essentially put up for auction when its chief executive of 10 years, Michael Tobin, resigned unexpectedly in August. The bid for Interxion Holding was seen as an unsuccessful defensive move to ward off suitors.

TelecityGroup executive board director John Hughes will join the expanded group's board, Equinix said.

The TelecityGroup/Interxion Holding combination carries a £15 million breakup fee.

Telecity turned to Goldman Sachs' Richard Cormack, Alex Garner, Anthony Gutman and Nicholas van den Arend for financial advice alongside Oakley Capital's Christian Maher and Anthony Yaneza. Barclays Bank's Jim Renwick, Matthew Smith and Joe Valenti, as well as Greenhill & Co. International's Pieter-Jan Bouten and David Wyles also provided financial advice to TelecityGroup.

Equinix took financial advice from JPMorgan Chase's Marco Caggiano, Laurence Hollingworth, Dwayne Lysaght and Fred Turpin.

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