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Why Equinix’s Telecity Offer Ended the Proposed Interxion Merger

Telecity ended its proposed merger with Interxion after accepting Equinix’s competing cash-and-share offer. The acquisition closed in January 2016 following EU clearance with divestiture commitments.
From TheFinanceBase Team2 min to read
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Equinix’s competing offer led Telecity Group to abandon its proposed all-share merger with Interxion. Telecity accepted Equinix’s cash-and-share offer in 2015; after European Commission clearance tied to divestiture commitments, Equinix completed the acquisition on 15 January 2016.

What happened to the Telecity–Interxion merger?

TelecityGroup and Interxion first pursued an all-share combination. They announced a non-binding agreement on 10 February 2015, which became binding on 9 March. Under the proposed terms, each Interxion share would be exchanged for 2.3386 Telecity shares. The merger was proposed, not completed.

Equinix then made a competing offer for Telecity. Telecity proceeded with that offer and terminated its agreement with Interxion. Equinix’s SEC-filed transaction materials stated: “The merger and implementation agreement that TelecityGroup entered into with Interxion on 9 March 2015 has been terminated.” Equinix transaction materials, 29 May 2015.

How did the two proposed deals differ?

Transaction Consideration Outcome
Telecity–Interxion proposed merger 2.3386 Telecity shares for each Interxion share Agreement terminated when Telecity proceeded with Equinix’s offer
Equinix offer for Telecity 572.5 pence in cash and 0.0327 new Equinix shares for each Telecity share Completed on 15 January 2016

The merger terms are set out in the TelecityGroup and Interxion announcement of 9 March 2015. Equinix’s May 2015 materials valued its offer at approximately £2.35 billion, using the reference share price and exchange rate specified in that announcement.

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What were the regulatory conditions and final outcome?

On 13 November 2015, Equinix announced that the European Commission had cleared its offer following approval of commitments to divest certain facilities. The announcement said Equinix expected completion in the first half of 2016; it did not mean the acquisition had already closed. Equinix’s clearance announcement.

Equinix completed the acquisition on 15 January 2016, and Telecity became its wholly owned subsidiary. Equinix reported the completed deal’s value as approximately $3.8 billion (£2.6 billion). That completion figure and the earlier approximately £2.35 billion offer valuation were reported at different stages and on different stated bases; they should not be treated as interchangeable. The completion details appear in Equinix’s 15 January 2016 filing.

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The European Commission’s Case M.7678 decision concerns the Equinix–Telecity acquisition. The announcements and decision establish that clearance involved divestiture commitments; they do not, on their own, provide a complete asset-by-asset account of the final divestment perimeter.

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