Equinix agrees £2.35bn deal with Telecity

Equinix has offered 1,145p per share, with 572.5p payable in cash. The value is a premium of around 34.9% to Telecity’s closing price of 849p on 10 February, which was the last trading day before Telecity announced its proposed merger with Interxion Holding NV.

Following the completion of the deal, which is expected in the first half of 2016, Telecity shareholders will hold around 10.1% of the combined group, the companies said.

The merger agreement that Telecity had entered into with Interxion in March has been terminated, said Equinix.

Olivetree Securities said that while the terms of the agreement are in keeping with the pre-bid announcement on 7 May, the point to note is that the timing is longer than the market had expected. In addition, there is a complication to the timing of the closing of the offer due to Equinix being a REIT.

“The offer is pre-conditional upon approval from European authorities and there is plenty of language in the document to suggest that the parties are anticipating an Article 9 request from certain member states to review the transaction locally – again potentially adding to the timeline,” said Olivetree.

Putting the deal on an initial rate of return of around 8% gives an implied Telecity share price similar to Thursday’s close, so it’s unlikely that the formalisation of this offer has any dramatic effect, Olivetree added.

By 0840 BTS, shares in Telecity were down 0.1% at 1,089.25p.