Europe Greenlights Equinix-Telecity Merger, With Caveats

European antitrust regulators have approved the planned acquisition of TelecityGroup by Equinix, making the Redwood City, California-based data center provider the largest player in the European market.

The European Commission issued the approval on the condition that the two companies sell eight specific data centers in London, Amsterdam, and Frankfurt. One of the facilities slated for divestiture is presently an Equinix data center, while all the others are operated by London-based Telecity.

Equinix’s winning $3.6 billion bid to buy the European company in May ripped it out of the teeth of Interxion, another major player in the market. Amsterdam-based Interxion had previously struck a deal to merge with Telecity.

Had the Interxion deal gone through successfully, Equinix would be relegated to the number-two position in Europe indefinitely. Equinix CFO Keith Taylor told us in an interview earlier this year that a successful Interxion-Telecity merger would make it nearly impossible for Equinix to ever change that number-two status, which was part of the reasoning for going after Telecity aggressively.

On the company’s third-quarter conference call in October, Equinix CEO Stephen Smith said the company had made an offer to the European Commission with proposed commitments to nudge the review process in the direction of a favorable outcome but did not disclose the proposal’s details. The planned divestment of some of the future combined entity’s data centers appears to be at least the meat of that offer.

Here are the facilities Equinix and Telecity have agreed to sell in exchange for a go-ahead from the regulators:

London

Amsterdam

Frankfurt

Together, the eight data centers generated about four percent of the revenue the combined company would have made in the first nine months of this year, Equinix said in a statement.

Not counting the assets slated for divestment, the deal will add 32 data centers to Equinix’s already massive portfolio in Europe. The company operates about 30 facilities in Europe and the Middle East.

The acquisition will give Equinix instant presence in new markets, such as Ireland, Italy, Sweden, and Finland, among others, and substantially expand its presence in the key European markets of London, Frankfurt, and Amsterdam.

Equinix officials expect to complete the acquisition in the first half of 2016.