Report: Digital Realty Mulling Interxion Acquisition

Digital Realty Trust is considering an acquisition of the major European data center colocation provider Interxion, according to reports citing the investor news service DealReporter.

Interxion, one of the largest data center providers in Europe, may be in need of a big next step, following the merger of its two major competitors, Equinix and TelecityGroup, which created a behemoth in the market that will be tough to compete with for smaller players. The Equinix deal last year interrupted a previously agreed to merger between Telecity and Interxion.

San Francisco-based Digital Realty, which traditionally built and sold wholesale data center space, recently shifted gears and went after the retail colocation and interconnection market, the domain ruled by the likes of Equinix, Telecity, and Interxion.

Following the $1.9 billion acquisition of US retail colocation heavyweight Telx with a big acquisition in the market across the Atlantic would give Digital a much stronger international retail colo story. A Digital Realty representative declined to comment on the record.

Read more: Telx Acquisition Closed, Here's Digital Realty's Plan

Jabez Tan, senior data center infrastructure analyst at Structure Research, said an acquisition of Interxion would make a lot of sense for Digital Realty. It would be difficult to build a colocation and interconnection presence in Europe that was as strong as the Telx play in the US organically, and Interxion is the only provider with a pan-European footprint that could be a viable acquisition target, he said.

Digital Realty currently has about 20 data centers in Europe, while Interxion has 40 data centers in 11 European countries, according to its website. “It’s a compelling combination, given Digital Realty’s strategy with Telx,” Tan said.

Interxion stock was up more than 2 points (about 8 percent) at market close Thursday, following news of the potential acquisition.