Equinix Snaps Up Telecity In £2.35 Billion European Data Centre Deal

US data centre provider Equinix will buy UK data centre rival Telecity Group for £2.35 billion, completing a move which will see Equinix become the biggest data centre provider in the European colocation market.

“On behalf of the board of TelecityGroup, I am very pleased to recommend the combination of TelecityGroup and Equinix to our shareholders today,” said Telecity’s executive chairman John Hughes in a statement on Friday. “Having carefully considered all our options, the board believes this is a compelling offer and an excellent outcome for shareholders, employees and customers.

Leading player

“TelecityGroup has become a leading player in the European data centre industry, consistently delivering an outstanding performance and high quality returns to shareholders. This is testament to the hard work of all TelecityGroup’s employees. I am delighted that they now have the opportunity to be part of a global technology leader, led by Equinix’s exceptional management team,” Hughes said.

In February, Telecity announced a planned merger with European data centre provider Interxion in a move which would make the resulting company larger in terms of market share than Equinix in the European data centre colocation market.

But Equinix stepped up its game earlier this year and made a counteroffer to Telecity, claiming a deal between the two would be “more compelling” than one between Telecity and Interxion. Interxion, a Dutch-based data centre company, offered an all-share deal of £2.2 billion.

Penny Jones, data centre analyst at 451 Research, told TechWeekEurope that the deal will be felt across Europe, with Equinix/Telecity staking a combined marketshare of 9.03 percent.

“This will make it a leader in the multi-tenant datacenter market Europe – by operational square feet,2 said Jones. “To put this in context, by 451 Research estimates, Equinix currently has a market share of 5.33 percent, wholesale provider Global Switch 4.38 percent, TelecityGroup 3.7 percent, Interxion 3.5 percent and Germany’s e-Shelter, which is being acquired by NTT has 3.4 percent.”

But Jones said that it must be remembered the deal won’t be closing until 2016, so there is still time left for further consolidation in the colo market. Jones said: “The opportunity still exists for these marketshare figures to alter drastically over the coming years, especially now we know that Interxion has been looking for a suitor.”

Equinix valued TelecityGroup shares at 1.145p, giving a premium of approximately 34.9 percent on Telecity’s closing price. Telecity shareholders will get 572.5p per share. The deal is expected to be completed in the first half of 2016.

Equinix CEO Stephen Smith said: “We are delighted to announce the combination of TelecityGroup and Equinix in what is an exciting day for the stakeholders of both companies.

“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 centres, as well as bringing the benefits of greater cloud and network density to our customers.”

Equinix will be holding a press conference later on Friday to discuss the purchase.