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Equinix to Buy Data Center Rival Telecity for $3.6 Billion

An Equinix data center in Secaucus, N.J.Credit...Chang W. Lee/The New York Times

LONDON — The American data center provider Equinix said on Friday that it had struck a deal to acquire its smaller British rival Telecity Group for about $3.6 billion in cash and stock.

The proposed transaction thwarts an all-share deal announced in February between Telecity and its European rival Interxion Holding. Equinix, one of the world’s biggest providers of data centers, swooped in with a competing offer this month.

Under the terms, Equinix would pay the equivalent of 11.45 pounds, or about $17.55, a share in a combination of cash and shares, a 34.9 percent premium to Telecity’s closing price on Feb. 10, the day before its planned alliance with Interxion was announced. The offer values Telecity at £2.35 billion.

Stephen M. Smith, the Equinix president and chief executive, said in a news release that adding Telecity would “considerably strengthen Equinix’s offering to customers in Europe and beyond, reinforcing us as a global leader in global interconnection and data centers, as well as bringing the benefits of greater cloud and network density to our customers.”

Telecity, which is based in London, operates data centers in 11 countries in Europe. Its shares fell less than 1 percent to £10.89 in early trading on Friday in London.

If the deal is completed, Telecity shareholders will receive 572.5 pence in cash per share and 0.0327 of the combined company per share. In the end, they would own about 10.1 percent of the combined company.

The board of directors of Telecity was expected to recommend that shareholders approve the Equinix deal.

“Having carefully considered all our options, the board believes this is a compelling offer and an excellent outcome for shareholders, employees and customers,” John Hughes, the Telecity executive chairman, said in a news release.

The deal is subject to regulatory approval, and is expected to close in the first half of next year. Mr. Hughes would become an Equinix director after the completion of the transaction.

Equinix, which is based in Redwood City, Calif., provides data center services in about 15 countries on five continents.

A version of this article appears in print on  , Section B, Page 2 of the New York edition with the headline: Business Briefing; Equinix to Acquire a Rival Data Center Provider. Order Reprints | Today’s Paper | Subscribe

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