"TelecityGroup is reviewing a $4.5 billion cash and stock acquisition offer by Equinix according to documents filed by TelecityGroup. The deal comes just months after a proposed merger between TelecityGroup and Interxion Holdings NV which would unseat Equinix as the largest data center provider in Europe. Equinix is the largest provider in Europe based on revenue.
The potential offer by Equinix would include a 50/50 cash and share offering equal to 1,145 pence for each share or 2.3 billion pounds total. That represents a 27 percent premium over the current TelecityGroup share price. Equinix shares also traded up on the news and added 1.9 percent to $236.08 in trading.
TelecityGroup is prohibited from seeking alternative proposals under the merger agreements 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.
What happens next? Equinix will have a 28 day period ending June 4th 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 TelecityGroup 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. In 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.
While it's too early to tell which company will ultimately win, one winner in all of this is investors of Telecity.
Mergers and acquisitions seem like almost a daily phenomenon in the datacenter and cloud space these days thanks to a strong market and growing demand. We expect to see this trend continuing with other large takeover targets in the near future."
