InterXion next on Digital Realty’s shopping list, sector advisors say
Digital Realty [NYSE:DLR] may pursue InterXion [NYSE:INXN] following the acquisition of European data centers from Equinix [NASDAQ:EQIX], several sector advisers said.
Earlier this month the San Francisco, California-based data center operator announced plans to purchase eight data centers from Equinix for USD 874m. Equinix divested the portfolio to comply with regulatory conditions on its acquisition of European operator Telecity.
Digital Realty declined to comment. InterXion did not respond to requests for comment.
As this news service previously reported, Digital Realty faces the question on whether to chase after Equinix and continue to be a dominant global player or to solidify its position as a smaller provider. The Telecity deal makes Equinix the largest global scale data center provider.
Three sector advisers said it appears that Digital Realty will continue to expand aggressively, and that it intends to pursue Netherlands-based InterXion. A source familiar with the matter agreed that the stage is now set for the companies to engage each other. It could not be learned if talks are taking place.
InterXion competed with Digital Realty to purchase the Telecity assets with the help of Guggenheim Partners, the source familiar said. Guggenheim did not respond to request for comment.
Ever since Equinix broke a merger agreement between InterXion and Telecity by coming in with an offer for the latter, InterXion has been a natural target for a larger player, this news service previously reported.
However, Digital Realty is not necessarily under great pressure to get a deal done immediately. A fourth adviser said that by securing the Equinix divests, the company could conceivably ratchet down its aggressiveness, since it now has a meaningful platform on the European continent.
A fifth adviser also pointed out that, on a granular level, there may be issues with the InterXion portfolio. For instance, Digital Realty’s newly expanded European presence might cause more overlaps between its footprint and InterXion’s, potentially creating antitrust issues.
This adviser pointed to the fact that InterXion did not win any data centers from the divest process – despite the fact that, as this news service reported, Equinix would have preferred not to sell to Digital Realty – as an indication that there could be some issues with integrating the portfolios.