Skip to main content

Problems for Telecity and Interxion proposed merger?

Mergers are never simple and the latest announcement from Telecity/Interxion does little to settle the nerves of the employees who may be at risk in the new merged company (opens in new tab). That the two companies feel it necessary to update stakeholders with little more than a holding statement, indicates that the two sides are closing in on an agreement, but whether that agreement is to merge or go their own ways is yet to be seen.

With NTT’s acquisition of e-shelter (opens in new tab) there is increasing pressure for consolidation in the market. The scale of a combined Telecity and Interxion will be impressive and there is a strong case for a merger that was flagged nearly a year ago (opens in new tab). Discussions into the merger are 'ongoing' and the intention is to complete the due diligence and definitive transaction documentation. However neither side appears to be ruling out the possibility of looking at other parties after March 9, and it opens the question of who else could be looking at one or both of them.

It is the last sentence in the announcement that reveals that the two boards may not be that close to their opposite valuations in stating,

“There can be no certainty that a binding agreement will be reached, nor as to the terms of such agreement.”

It may be that Telecity feel that the resurgence in their share price is optimism for a better deal, certainly the price is closer to the high in late June 2013 than it ever has been, the question is whether this is merely because of the merger talks or actual performance, probably a little of both. The question if this deal falls through, what next for either company?