Equinix Makes TelecityGroup Bid

TelecityGroup is reviewing a cash and stock takeover bid from Equinix months after a proposed merger between European data center giants Telecity and Interxion, according to documents filed by TelecityGroup. Equinix's bid values Telecity at around $3.4 billion.

The Equinix bid potentially threatens the Telecity and Interxion merger, which was proposed as an all-share deal. A lot of the storyline around a potential Telecity Interxion merger was that the combined forces would leapfrog Equinix as the biggest provider in Europe. Equinix is the largest provider worldwide in terms of revenue.

Equinix has offered an almost 50/50 stock and cash split, or about $17.42 per share for a premium of 27 percent over current Telecity stock. While it’s too early to tell which company will ultimately win out once the smoke clears, one winner in all of this is investors of Telecity.

Telecity is prohibited from seeking alternative proposals under the merger agreement with Interxion, but takeover discussions are allowed in limited circumstances.

“Having carefully considered the Equinix proposal in the light of this exception, the Board of TelecityGroup has determined that it is required by virtue of its fiduciary duties to enter into discussions with Equinix and has decided to permit Equinix to undertake a short period of due diligence,” said TelecityGroup in a press release.

Equinix will have a 28-day period ending June 4^th to announce either a firm intention to make an offer or to state it does not intend to make an offer.

Equinix said in a statement that a deal with Telecity would create “a more compelling combination than the proposed merger with Interxion and would deliver greater value for Telecity shareholders.”

A deal would complement and extend Equinix’s geographic footprint in Europe, enabling increased network and cloud density to better serve customers, according to Equinix.

n the United Kingdom, the acquisition of TelecityGroup would add capacity in Central London and Docklands that would complement Equinix’s current operations in Slough. An acquisition would add capacity in several of Equinix’s current locations throughout Europe, and extend Equinix’s footprint into new locations such as Dublin, Helsinki, Istanbul, Milan, Stockholm and Warsaw.

Rampant consolidation is currently occurring in the data center industry. Earlier this week QTS agreed to acquire cloud provider Carpathia. Telx is rumored to be exploring a potential $2 billion sale as well.