Equinix Inc (NASDAQ:EQIX) has made a £2.3 Billion offer to take over TeleCity Group Plc, which is based in London. The U.S. Group’s £2.3 Billion offer includes the shares of Equinix and cash worth £1.25 Billion.
It is part of the company’s initiative to prevent the merger of TeleCity with InterXion Holding NV (NYSE:INXN). This move allows the company to prevent the formation of a big rival in the burgeoning cloud market of the Europe.
The new move also prevents takeover bid for the Telecity from other rivals like Digital Reality and NTT Communications.
The new initiative offers a chance for the company to increase its market share in the cloud computing business of the Europe.
The data center firms are desperately trying to win a piece of the market share in the promising segment of storage and the news services. It is on the back of increased demand created by the cloud computing and mobile devices.
According to Telecity, the company is seriously considering offers. But it has not yet staged a decision to consider the proposal of any of the companies.
On confirming its approach to the takeover of Telecity, the U.S. based Equinix told the new deal creates more promising option and delivers a great value for the shareholders of Telecity. The Telecity shareholders will get 55% stake in the newly formed business.
The new deal would be a better option when compared to the proposed amalgamation with Interxion.
The proposed takeover of Telecity will help Equinix with new data centers in Amsterdam and the Docklands financial district. Following the takeover, Equinix Inc (NASDAQ:EQIX) will grab second rank in Europe.
According to Jefferies analysts, the newly formed business will compete with Equinix in the U.S. for acquisitions and order flows. It will also create completion for Equinix in Europe too.
According to analysts, the takeover bid will have to face antitrust questions from the regulators.
Equinix is given time up to June 4 to make a final bid for the Telecity.
According to John Hughes, Chairman, Telecity, the company’s announced share buyback plan for £400 million will be implemented if something happens to prevent the merger.
