Equinix wins battle to acquire Telecity in £2.35bn deal

Acquisition of UK operator offers Equinix a foothold in the European market as cloud computing demand booms.

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US data centre giant Equinix has agreed a £2.35 billion deal to acquire UK operator Telecity, seeing off competition from rival bidders.

It had appeared that Dutch firm Interxion was set to take over Telecity back in February, in a bid to capitalise on the demand for cloud computing in Europe.

However, it was subsequently announced in May that Equinix had joined the running to take over the firm, with its offer effectively ending Interxion’s chances of a deal.

The two firms have now announced an agreement, with Equinix offering 1,145 pence per share, including 572.5 pence payable in cash and the rest in stock.

The acquisition will support the US firm’s ambitions to expand into Europe, said Equinix CEO, Stephen Smith. 

“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,” Smith said in a statement.

The deal, which follows the departure of Telecity CEO Mike Tobin last year, will offer UK firm’s customers "new global opportunities for their connected data centre requirements”, according to chairman John Hughes. Telecity customers include Walkers, Spotify, Fender, Toys 'R' Us and Atos.

TechMarketView analyst Kate Hanaghan said the decision to accept Equinix’s bid is likely to be beneficial for both parties.

“We are not surprised there have been a few twists and turns in this tale. Scale, in terms of facilities, capabilities and geographical coverage, is of course paramount for data centre providers, and serious opportunities to improve that must not be overlooked.

“For Equinix, the addition of Telecity extends its presence in Europe and increases its cloud capabilities.”