Equinix and Telecity Group are merging, which will stregthen Equinix’s presence in the EU

Equinix and TelecityGroup have agreed the terms of a merger that will see the American datacentre incumbent pay $2.35bn for all issued Telecity shares.  The deal also means the proposed merger between Telecity and Interxion is dead in the water.

Under the terms of the merger each Telecity shareholder will be entitled to receive £5.72 for each share and 0.0327 new Equinix shares. Following the merger’s completion Telecity shareholders will hold just over 10 per cent of the shares in the combined group.

John Hughes, executive chairman of the board of TelecityGroup will also be joining the Equinix board.

“On behalf of the Board of TelecityGroup, I am very pleased to recommend the combination of TelecityGroup and Equinix to our shareholders today. Having carefully considered all our options, the Board believes this is a compelling offer and an excellent outcome for shareholders, employees and customers,” Hughes said.

“Through this transaction, our customers will have new global opportunities for their connected datacentre requirements.  The combination of Equinix and TelecityGroup services and people will ensure the expanded business leads the way in the provision of highly-connected data centre services for customers in Europe and all over the world.”

Stephen Smith, chief executive officer and president of Equinix said TelecityGroup will “considerably strengthen” its current offerings in Europe and help reinforce its position in the interconnection business.

“The transaction will allow Equinix to benefit from increased scale and extend the global reach of our platform. We believe our offer is compelling to TelecityGroup shareholders who will realise significant value for their holdings while having the opportunity to participate in the future strengths of the combined business,” Smith said.

“We are especially pleased to be welcoming John Hughes onto the Board of the combined business and will greatly benefit from his experience in the technology space,” he added.

The move also means that the proposed merger between TelecityGroup and Interxion is dead. When news broke of the merger talks earlier this month Equinix’s board called Interxion out, claiming an Equinix merger would be more beneficial from the perspective of shareholders.

If the merger is approved TelecityGroup will give Equinix a stronger presence in the UK and extend its footprint into new locations with identified cloud and interconnection needs including Dublin, Helsinki, Istanbul, Milan, Stockholm and Warsaw, something Equinix is clearly willing to splurge on. Telecity’s market cap when news of the potential merger originally broke earlier this month stood at £1.4bn, so Equinix is paying a premium of around £950m.