US datacentre and co-hosting company Equinix has made a £2.35bn ($3.6bn) bid for UK rival Telecity Group, an acquisition that would make it the largest datacentre provider in Europe.
The agreement between Equinix and Telecity puts an end to a planned merger, announced in February, between Telecity and Dutch datacentre provider Interxion.
The all-European merger was thrown into doubt in May after Equinix opened discussions with Telecity over a £2.3bn deal. It had until June 4 to make a formal proposal, and should its subsequent £2.35bn offer be accepted, Equinix will become by far the largest datacentre company on the continent. It will also be better positioned to capitalise on Europe's growing appetite for enterprise cloud computing.
Equinix's bid will give each Telecity shareholder 572.5 pence in cash and 0.0327 new Equinix shares.
The £2.35bn offer amounts to a 34.9 percent premium on the closing price of Telecity shares on 10 February 2015 - the day prior to Telecity announcement of its planned merger with Interxion. Telecity shareholders will own 10.1 percent of the merged company.
Telecity on Friday officially called off the merger with Interxion, urging shareholders to vote in favour of Equinix's offer.
"Having carefully considered all our options, the Board believes this is a compelling offer and an excellent outcome for shareholders, employees and customers," said John Hughes, executive chairman of Telecity.
The acquisition will give Equinix 39 new datacentres in 12 cities providing 100MW of power and 2,500 customer contracts. Importantly, it will also absorb Telecity's customers across London Docklands.
Equinix currently has 30 datacentres in across the UK, the Netherlands, Germany, France, Switzerland, and the UAE, which generate a quarter of its global revenues.
Telecity will give it new capacity in Amsterdam, London, Frankfurt and Paris and new locations in Dublin, Manchester, Stockholm, Helsinki, and Milan, as well as new capacity in Warsaw, Sofia, and Istabul, paving the way for the company's entry to Eastern Europe and Turkey.
Stephen Smith, CEO and president of Equinix, said Telecity "will considerably strengthen Equinix's offering to customers in Europe and beyond, reinforcing us as a global leader in global interconnection and datacentres, as well as bringing the benefits of greater cloud and network density to our customers."
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