TIDMTCY TIDMINXN
RNS Number : 8687G
Telecity Group PLC
09 March 2015
9 March 2015
TelecityGroup and Interxion Reach Definitive Agreement on
All-Share Merger
London and Amsterdam - 9 March 2015 - TelecityGroup plc (LSE:
TCY.L; "TelecityGroup") and Interxion Holding N.V. (NYSE: INXN;
"Interxion"), each a provider of data centres in Europe, announce
that they have entered into a definitive agreement on an all-share
merger on the same terms as announced on 11 February 2015. The
transaction will be structured as an offer by TelecityGroup to
acquire all the issued and to be issued share capital of
Interxion.
The boards of TelecityGroup and Interxion believe the
combination of the two businesses is strategically compelling.
Demand for data centre services is evolving rapidly as enterprise
data and digital applications migrate to the cloud. The additional
geographic scope and financial scale of the combined business will
provide customers with more robust connectivity choices and cloud
platforms, and will be better positioned to service the needs of
global data centre customers.
TelecityGroup Executive Chairman John Hughes said: "Today is
another important step in the transformational merger of
TelecityGroup and Interxion to create a leading data centre
services platform that will be well-positioned to address global
markets. This merger is underpinned by significant value creation
potential and I am pleased to confirm that we are delivering on our
commitment to create value and returns for shareholders with the
initiation of a share buy-back programme upon closing of the
transaction of up to GBP800 million. I look forward to the
completion of this merger and working with our colleagues at
Interxion."
Interxion Chief Executive Officer David Ruberg said: "The
combination of Interxion and TelecityGroup leverages the core
strengths of both companies, providing the opportunity to drive
growth and capture a greater share of the expanding global data
centre market. Together, we will have the enhanced scale and scope
to further develop communities of interest and provide our
customers with greater product choice, solutions and connectivity
as European cloud adoption develops. I look forward to working with
the TelecityGroup team as we capitalise on the significant growth
opportunities ahead and deliver additional value to our customers,
partners and investors."
Interxion Chairman John Baker said: "This is a compelling
combination that delivers meaningful value for shareholders.
Interxion shareholders further benefit from the opportunity to
participate in the significant upside of the combined group, which
will be strongly positioned to deliver on its strategic
objectives."
Key Terms
The terms of the transaction are as announced on 11 February
2015, with Interxion shareholders receiving 2.3386 new
TelecityGroup shares per Interxion share. As a result,
TelecityGroup shareholders will own approximately 55%, and
Interxion shareholders approximately 45%, of the combined group.
The primary listing for the combined group will be on the London
Stock Exchange with a U.S. listing for TelecityGroup's existing ADR
programme contemplated on either the New York Stock Exchange or
NASDAQ.
Key Benefits of the Proposed Combination
Customer benefits
-- Wide range of connectivity and access to all major cloud platforms;
-- Complementary geographic footprint with multi-site / multi-country products and services;
-- Enhanced customer offerings and product choice to attract
magnetic customers and grow communities of interest;
-- Continued data centre innovation and additional managed services on an expanded scale;
-- Expanded gateways to global markets; and
-- Operational excellence and enhanced customer service.
Significant synergy potential
-- Incremental EBITDA from enhanced growth opportunities is
estimated by TelecityGroup to be approximately GBP10 million per
year on a run-rate basis;
-- Cost savings attributable to reduction of duplicate
activities, combined operations and support, streamlining of
go-to-market activities and elimination of duplicate general and
administrative expenditure are estimated by TelecityGroup to be
approximately GBP30 million per year on a run-rate basis;
-- These synergies are expected to be fully realised in the
third full year following completion with an estimated one-off cost
of implementation of approximately GBP30 million expected to be
incurred by the end of the first full year following
completion;
-- TelecityGroup also estimates reduced cost for new builds and
optimised maintenance and sales capex synergies of approximately
GBP15 million per year and additional one-off capex savings from
cancellation of specific projects for a value of approximately
GBP150 million;
-- In total, capital expenditure synergies are estimated by
TelecityGroup to have a net present value of GBP275 million -
GBP325 million;
-- In aggregate, this equates to a net present value of total
synergies of GBP575 million - GBP625 million; and
-- In addition, TelecityGroup expects other incremental benefits
from financial synergies, including cost of capital, tax, and
commercial synergies.
Capital market access
-- Enhanced access to the capital markets; and
-- Combined balance sheet strength and capital allocation
discipline that will enable the combined group to capitalise on
future growth opportunities as well as deliver predictable capital
returns to shareholders.
It is intended that the combined group will seek to initiate a
share buy-back programme of up to GBP800 million upon closing of
the proposed transaction. TelecityGroup expects to target a net
debt / EBITDA ratio of up to 3.0x.
The transaction is expected to be broadly earnings neutral to
TelecityGroup shareholders in the first full year of the combined
group (assuming full run-rate synergies and excluding one-off costs
of implementation) and earnings accretive thereafter.*
TelecityGroup shareholders will benefit from the enhanced
revenue and total shareholder returns of the combined group as well
as the significant value creation potential that will accrue from
the cost and capital expenditure synergies. The combined group will
pursue a profitable growth strategy with a disciplined capital
allocation approach and a commitment to returning cash to
shareholders with a focus on building shareholder value.
Irrevocable Undertakings
The directors of Interxion have irrevocably committed in respect
of their aggregate holding of 858,762 shares (approximately 1.24%
of Interxion's outstanding share capital) and Baker Capital
entities have also irrevocably committed in respect of their
aggregate holding of 18,657,892 shares (approximately 26.89% of
Interxion's outstanding share capital and, when aggregated with the
holdings of the directors of Interxion, 19,516,654 shares and
approximately 28.13% of Interxion's outstanding share capital):
-- Not to sell their Interxion shares before completion of the transaction; and
-- To accept the offer to be made by TelecityGroup in respect of their Interxion shares.
Interxion directors have irrevocably committed not to sell or
otherwise deal in the TelecityGroup shares received by them
pursuant to their acceptance of the offer for a period of 180 days
following completion of the transaction (subject to customary
permitted sale and transfer provisions including concerning estate
planning, tax payments and as may be agreed by TelecityGroup).
The directors of TelecityGroup have irrevocably committed to
vote in favour of the resolutions to be proposed at a general
meeting of TelecityGroup shareholders to approve the merger and
issue the new TelecityGroup shares.
The undertakings described above will lapse in limited
circumstances, including pursuant to fiduciary obligations and
termination of the binding implementation agreement described
below.
Governance and Senior Management
John Hughes will be Chairman of the combined group, with John
Baker as Deputy Chairman. David Ruberg has played a key role in
orchestrating the combination of TelecityGroup and Interxion and
will initially lead the new, combined group to launch this
important new phase. As part of the transaction, he has agreed to
remain as Chief Executive Officer for a period of 12 months while
an appropriate successor can be identified and recruited. Upon
receipt of all relevant anti-trust approvals, the Board of
TelecityGroup will formally commence the search for a new Chief
Executive Officer to lead the combined group. Eric Hageman will be
Chief Financial Officer of the combined group. The board of the
combined group will comprise a balance of three independent
non-executive directors from each of TelecityGroup and
Interxion.
John Hughes will continue to operate as Executive Chairman of
TelecityGroup until completion of the proposed transaction. Claudia
Arney, the Senior Independent Non-Executive Director for
TelecityGroup, has taken up the role of Deputy Chair of
TelecityGroup for the same period.
Anticipated Timetable to Completion
Due to its size, the proposed all-share merger is a Class 1
transaction under the UK Listing Rules and therefore requires the
approval of TelecityGroup shareholders. Completion of the
transaction will also be subject, amongst other things, to
TelecityGroup having received valid acceptances for at least 95 per
cent of the total issued share capital of Interxion (or, at
TelecityGroup's election, not less than 80 per cent) and all
relevant regulatory and anti-trust approvals.
Prior to launching the tender offer, TelecityGroup and its
advisers must prepare a number of documents for filing as part of
the US registration and listing process, and Interxion shall
undertake consultations on the proposed transaction with relevant
works councils, trade unions and other employee organisations.
Final documents are expected to be filed, alongside publication of
the prospectus and circular to TelecityGroup shareholders, in the
second half of 2015.
The transaction is expected to close in the second half of
2015.
Conference Call Details
TelecityGroup and Interxion will host joint conference calls at
09:30 (GMT) / 05:30 (EST) and 12:30 (GMT) / 08:30 (EST).
Conference call: 09:30 (GMT) / 05:30 (EST)
UK: +44 (0) 20 3427 1908 // US: +1 646 254 3360
Confirmation code: 3026039
Conference call: 12:30 (GMT) / 08:30 (EST)
UK:+44 (0) 20 7136 2050 // U.S.: +1 212 444 0412
Confirmation code: 8738097
Goldman Sachs International is acting as lead financial adviser
to TelecityGroup. Oakley Capital Limited, Barclays Bank PLC, acting
through its investment bank and Greenhill & Co International
LLP are acting as financial advisers to TelecityGroup.
Perella Weinberg Partners LP is acting as lead financial adviser
to Interxion. BofA Merrill Lynch is acting as financial adviser to
Interxion.
Enquiries
TelecityGroup
Goldman Sachs International (Lead Financial
Adviser)
Anthony Gutman
Richard Cormack
Nicholas van den Arend +44 (0) 20 7774
Alex Garner 1000
================================================== ================
Oakley Capital Limited (Financial Adviser)
Christian Maher +44 (0) 20 7766
Anthony Yaneza 6933
================================================== ================
Barclays Bank PLC, acting through its investment
bank (Financial Adviser)
Matthew Smith
Jim Renwick +44 (0) 20 7623
Joe Valenti 2323
================================================== ================
Greenhill & Co International LLP (Financial
Adviser)
Pieter-Jan Bouten +44 (0) 20 7198
David Wyles 7400
================================================== ================
Brunswick (Public Relations Adviser)
Sarah West
Ben Fry +44 (0) 20 7404
Helen Smith 5959
================================================== ================
Interxion
Perella Weinberg Partners LP (Lead Financial
Adviser)
Scott Bruckner
Paulo Pereira +44 (0) 20 7268
Riccardo Benedetti 2800
================================================ ================
BofA Merrill Lynch (Financial Adviser)
Bob Elfring
Luigi Rizzo +44 (0) 20 7628
Paul Harvey 1000
================================================ ================
Joele Frank, Wilkinson Brimmer Katcher (Public
Relations Adviser)
Matt Sherman
Mahmoud Siddig
Scott Bisang +1 212 355 4449
================================================ ================
Sources and Bases
Information contained within this announcement has been
calculated on the basis of the following:
-- TelecityGroup basic number of shares of 203.0 million and
fully diluted number of shares of 204.8 million;
-- Interxion basic number of shares of 69.4 million and fully
diluted number of shares of 70.8 million; and
-- The exchange ratio of 2.3386 new TelecityGroup shares per
Interxion share implies a 15% premium to the undisturbed Interxion
share price of $26.47 per Interxion share (as at the close of
business on 9 February 2015).
* This statement should not be interpreted to mean that earnings
per share for TelecityGroup shareholders will necessarily be
greater than those for the year ended 31 December 2013 or 31
December 2014.
Summary of the Key Terms of the Merger
The merger will be implemented by way of a tender offer to
Interxion shareholders. The terms of the merger are as announced on
11 February 2015. Interxion shareholders will receive 2.3386 new
TelecityGroup shares for each Interxion share.
The board of Interxion has unanimously approved the transaction
and has resolved to recommend that holders of Interxion shares
accept the tender offer. In order to facilitate the implementation
of the merger, TelecityGroup and Interxion have entered into a
binding implementation agreement in which Interxion has given
certain undertakings to co-operate with TelecityGroup and
TelecityGroup has given certain undertakings to Interxion
concerning, among other things, its conduct in connection with the
tender offer.
Conditions to the offer include:
-- TelecityGroup having received valid acceptances for at least
95 per cent of the total issued share capital of Interxion (or, at
TelecityGroup's election, not less than 80 per cent);
-- All relevant anti-trust and other regulatory approvals having been obtained;
-- TelecityGroup shareholders having approved the transaction;
-- Neither TelecityGroup or Interxion suffering a material adverse effect;
-- The listing of the new TelecityGroup securities to be issued in the offer; and
-- The registration of TelecityGroup with the United States
Securities and Exchange Commission (the "SEC") and the listing of
TelecityGroup's ADRs on the New York Stock Exchange or NASDAQ.
The implementation agreement will shortly be filed by Interxion
with the SEC - its key terms are as follows:
Termination provisions
The implementation agreement may be terminated in certain
circumstances, including:
-- The board of either TelecityGroup or Interxion changes its recommendation of the merger;
-- Any condition becomes incapable of satisfaction and (if capable of waiver) is not waived;
-- The shareholders of TelecityGroup do not approve the merger;
-- Either TelecityGroup or Interxion suffers a material adverse event;
-- Either TelecityGroup or Interxion materially breaches the
terms of the implementation agreement; and
-- A superior competing proposal for TelecityGroup is
recommended by the TelecityGroup board or a superior competing
proposal for Interxion is recommended by the Interxion board.
Cost reimbursement arrangements
Interxion will pay TelecityGroup a cost reimbursement of GBP15
million in certain circumstances, including in the event that
Interxion's board does not recommend the merger or once given
modifies its recommendation (assuming that TelecityGroup has not
suffered a material adverse effect, and unless such a change in
recommendation is in accordance with the Interxion board's
fiduciary duties in respect of the requirements of an anti-trust
authority) or a competing offer is announced prior to termination
of the implementation agreement and is recommended by the Interxion
board or completes within 9 months after termination.
TelecityGroup will pay Interxion a cost reimbursement of GBP15
million in certain circumstances, including in the event that
TelecityGroup's board does not recommend the merger or once given
modifies its recommendation (assuming that Interxion has not
suffered a material adverse effect, and unless such a change in
recommendation is in accordance with the TelecityGroup board's
fiduciary duties in respect of the requirements of an anti-trust
authority) or a competing offer is announced prior to termination
of the implementation agreement and is recommended by the
TelecityGroup board or completes within 9 months after
termination.
Non-solicitation
-- The implementation agreement prohibits either Interxion or
TelecityGroup from soliciting alternative proposals and from
discussing alternative proposals, except in limited circumstances,
including the receipt of a superior proposal by a third party.
-- Interxion and TelecityGroup are each required to give the
other party notice of the terms of any such competing proposal and
the identity of any such third party making it.
-- Interxion is required to give TelecityGroup the opportunity
to submit a revised offer in light of any superior proposal, and to
recommend any such revised offer if it is at least as attractive as
the alternative proposal to holders of Interxion shares.
Delisting
On completion of the merger, TelecityGroup intends to pursue a
delisting of Interxion from the New York Stock Exchange.
Further information
Further details in relation to the transaction will be set out
in the prospectus and circular which will be published and, in the
case of the circular, sent to TelecityGroup shareholders in due
course. TelecityGroup shareholders' attention is drawn, in
particular, to the risk factors to be included in these
documents.
Notes to Editors
TelecityGroup is a provider of data centres in Europe, operating
highly connected facilities in key cities.
These data centres are the places in which separate networks
that make up the internet meet and where bandwidth-intensive
applications, content and information are hosted. TelecityGroup's
customers take advantage of the highly connected facilities to
operate, store, share, distribute and access digital media, IT
applications and information effectively and efficiently.
TelecityGroup plc is listed on the London Stock Exchange (LSE:
TCY.L).
www.telecitygroup.com/investor-centre/investor-centre-home.htm
Interxion is a provider of data centre services in Europe,
serving a wide range of customers through 39 data centres in 11
European countries. Interxion's data centres offer customers
extensive security and uptime for their mission-critical
applications. With over 500 connectivity providers, 350 cloud
providers and 20 European Internet exchanges across its footprint,
Interxion has created connectivity, cloud, content and finance hubs
that foster growing customer communities of interest. For more
information, please visit www.interxion.com.
On 4 March 2015, Interxion announced its results for the year
ended 31 December 2014, in which is stated that Interxion had
unaudited gross assets of EUR1,173.103 million and unaudited gross
profits of EUR50.509 million.
Interxion Holding N.V. is listed on the New York Stock Exchange:
(NYSE: INXN).
Goldman Sachs International, which is authorised by the
Prudential Regulation Authority and regulated by the Financial
Conduct Authority and the Prudential Regulation Authority in the
United Kingdom, is acting for TelecityGroup and no one else in
connection with the proposed transaction and will not be
responsible to anyone other than TelecityGroup for providing the
protections afforded to clients of Goldman Sachs International, or
for giving advice in connection with the proposed transaction or
any matter referred to herein.
Oakley Capital Limited is authorised and regulated by the
Financial Conduct Authority. Oakley Capital Limited is acting as
financial adviser for TelecityGroup and no one else in connection
with the matters set out in this announcement and will not regard
any other person as its client nor be responsible to anyone other
than those persons for providing the protections afforded to
clients of Oakley Capital Limited nor for providing advice in
relation to the matters referred to in this announcement.
Barclays Bank PLC, acting through its Investment Bank
("Barclays"), which is authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct Authority and the
Prudential Regulation Authority in the United Kingdom, is acting
for TelecityGroup and no one else in connection with the proposed
transaction and will not be responsible to anyone other than
TelecityGroup for providing the protections afforded to clients of
Barclays, or for giving advice in connection with the proposed
transaction or any matter referred to herein.
Greenhill & Co. International LLP, which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority,
is acting for TelecityGroup and no one else in connection with the
proposed transaction and will not be responsible to anyone other
than TelecityGroup for providing the protections afforded to
clients of Greenhill & Co International LLP, or for giving
advice in connection with the proposed transaction or any matter
referred to herein.
Perella Weinberg Partners LP which is a registered broker dealer
with the U.S. Securities and Exchange Commission, is acting for
Interxion and no one else in connection with the transaction and
will not be responsible to anyone other than Interxion for giving
advice in connection with the transaction or any matter referred to
herein.
Merrill Lynch International ("BofA Merrill Lynch"), a subsidiary
of Bank of America Corporation, is acting exclusively for Interxion
in connection with the matters described in this announcement and
for no one else and will not be responsible to anyone other than
Interxion for providing the protections afforded to its clients or
for providing advice in relation to the matters described in this
announcement or any transaction or any other matters referred to
herein.
A copy of this announcement is also available, subject to
certain restrictions relating to persons resident in restricted
jurisdictions, on TelecityGroup's website at www.telecitygroup.com
and on Interxion's website at www.interxion.com.
The content of the websites referred to in this announcement are
not incorporated into and do not form part of this
announcement.
Forward-looking Statements
This announcement contains statements which constitute
"forward-looking statements". Forward- looking statements include
any statements related to the proposed transaction and the expected
benefits or estimated synergies resulting from the proposed
transaction with Interxion and are generally identified by words
such as "believe", "expect", "anticipate", "intend", "estimate",
"will", "may", "continue", "should", and other similar expressions.
Forward-looking statements are subject to various risks and
uncertainties, many of which are difficult to predict and generally
beyond the control of TelecityGroup and Interxion, that could cause
actual results and developments to differ materially from those
expressed in, or implied or projected by, the forward-looking
statements.
In addition, there can be no assurance that the proposed
business combination will be completed in a timely manner, or at
all. Neither TelecityGroup, nor Interxion, undertakes any
responsibility to update any of the forward-looking statements
after this date to conform such statements to actual results, to
reflect the occurrence of anticipated results or otherwise, except
to the extent legally required.
No statement in this announcement is intended as a profit
forecast or profit estimate and no statement in this announcement
should be interpreted to mean that earnings per TelecityGroup or
Interxion ordinary share for any period would necessarily match or
exceed the historical published earnings per TelecityGroup or
Interxion shares.
No Offer or Solicitation
This announcement is not intended to and does not constitute an
offer to sell or the solicitation of an offer to subscribe for or
buy or an invitation to purchase or subscribe for any securities or
the solicitation of any vote in any jurisdiction pursuant to the
proposed transactions or otherwise, nor shall there be any sale,
issuance or transfer of securities in any jurisdiction in
contravention of applicable law. No offer of securities shall be
made except by means of a prospectus meeting the requirements of
Section 10 of the Securities Act of 1933, as amended, and
applicable United Kingdom regulations. Subject to certain
exceptions to be approved by the relevant regulators or certain
facts to be ascertained, the public offer will not be made directly
or indirectly, in or into any jurisdiction where to do so would
constitute a violation of the laws of such jurisdiction, or by use
of the mails or by any means or instrumentality (including without
limitation, facsimile transmission, telephone and the internet) of
interstate or foreign commerce, or any facility of a national
securities exchange, of any such jurisdiction. No prospectus is
required in accordance with Directive 2003/71/EC, as amended, in
connection with this announcement.
Important Information
TelecityGroup has not commenced and may not make an offer to
purchase Interxion shares as described in this announcement. In the
event that TelecityGroup makes an offer (as the same may be varied
or extended in accordance with applicable law), TelecityGroup will
file a registration statement on Form F-4, which will include a
prospectus and joint proxy statement of TelecityGroup and
Interxion, and a tender offer statement on Schedule TO (the
"Schedule TO"). If an offer is made it will be made exclusively by
means of, and subject to, the terms and conditions set out in, an
offer document containing and setting out the terms and conditions
of the offer and a letter of transmittal and form of acceptance to
be delivered to Interxion, filed with the SEC and mailed to
Interxion shareholders. Any offer in the United States will be made
by TelecityGroup or an affiliate of TelecityGroup and not by any
other person.
The release, publication or distribution of this announcement in
certain jurisdictions may be restricted by law and therefore
persons in such jurisdictions into which this announcement is
released, published or distributed should inform themselves about
and observe such restrictions.
IF AN OFFER IS MADE, SHAREHOLDERS OF INTERXION ARE URGED TO READ
ANY DOCUMENTS REGARDING THE OFFER WHEN THEY BECOME AVAILABLE
(INCLUDING THE EXHIBITS THERETO) AS THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE OFFER.
If an offer is made, the registration statement, the joint proxy
statement, the Schedule TO and other related documents will be
available electronically without charge at the SEC's website,
www.sec.gov, after they have been filed. Any materials filed with
the SEC may also be obtained without charge at TelecityGroup's
website, www.telecitygroup.com. This announcement does not
constitute an offer or a solicitation in any jurisdiction in which
such offer or solicitation is unlawful. An offer will not be made
in, nor will deposits be accepted in, any jurisdiction in which the
making or acceptance thereof would not be in compliance with the
laws of such jurisdiction. However, if an offer is made,
TelecityGroup may, in its sole discretion, take such action as it
may deem necessary to extend an offer in any such jurisdiction.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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