TelecityGroup, a large data center operator headquartered in the UK, has announced the intention to buy European and New York-listed data center operator Interxion in an all-share-deal worth £1.4 billion. Key benefits of the proposed combination would include enhanced complementary customer offerings and an expanded geographical footprint of the combined group, which gives customers access to the combined portfolio of services across Europe.
The boards of Interxion and TelecityGroup believe the combination of TelecityGroup and Interxion businesses is highly compelling, while they also see significant synergy potential. Incremental EBITDA from cost synergies and enhanced growth opportunities are estimated by TelecityGroup to be approximately £40 million per year and capital expenditure synergies are estimated by TelecityGroup to have a net present value of approximately £300m. In total, this would equate to a net present value of total synergies of approximately £600m.
In addition, TelecityGroup expects substantial incremental benefits from technology, capital productivity and commercial synergies, as well as tax and other financial synergies, and enhanced access to the capital markets and the opportunity of a lower cost of capital.
Transitioning to the cloud
“Bringing together the assets and solutions offered by Interxion and Telecity will improve our customers’ ability to realize the benefits of transitioning to the cloud,” said Interxion CEO David Ruberg. “Together, we expect to be able to further reduce our customers’ total cost of operation, help them deliver improved functionality to their customers, and deliver industry leading quality of service.”
Under the terms of the non-binding agreement, Interxion shareholders would receive 2.3386 new TelecityGroup shares per Interxion share. As a result, Interxion shareholders would own approximately 45%, and TelecityGroup shareholders approximately 55%, of the combined group. The primary listing for the combined group would be in London with a New York Stock Exchange listing for TelecityGroup’s existing ADR program contemplated.
Headquartered in the Netherlands, Interxion serves a wide range of customers through 39 data centers in 11 European countries. With over 500 connectivity providers, 400 cloud providers and 20 European Internet exchanges across its footprint, Interxion has created connectivity, cloud, content and finance hubs that foster growing customer communities of interest.
Headquartered in London, TelecityGroup operates data centers in prime locations across Europe including Amsterdam, Dublin, Frankfurt, Helsinki, London, Manchester, Milan, Paris and Stockholm