LONDON (Reuters) - U.S. data centre company Equinix Inc (O:EQIX) said on Friday it had agreed to buy British peer Telecity Group (L:TCY) in a deal worth 2.35 billion pounds which ends Telecity's pursuit of smaller Dutch firm Interxion Holding NV (N:INXN).
Telecity, which runs some of the huge computer centres which process traffic on the Internet, said in a statement its board had recommended Equinix's offer, and as such it was terminating an all-stock deal to buy Interxion for $2.2 billion (438 million pounds).
The acquisition of Telecity by Equinix, a deal which Reuters reported was near to finalisation on Thursday, would create the largest data centre player in Europe.
Underpinning deal activity in the sector is the players' plans to tap growing demand across new geographies for "cloud" technology, whereby the data and processing for devices like smartphones is carried out on millions of remote servers.
Equinix said the approximate 1,145 pence per share deal represented a 27.3 percent premium to the Telecity's closing price on May 6, before talks were announced, and that Telecity shareholders would receive 572.5p per share plus 0.0327 new Equinix shares.
Shares in Telecity, which have jumped 21 percent since Equinix announced its interest, traded down 0.2 percent to 1,087p at 0711 GMT (8:11 a.m.).
Following completion of the deal, expected in the first half of 2016, Telecity Group shareholders will hold 10.1 percent of the combined company and Telecity Executive Chairman John Hughes will join the board of Equinix.
Hughes called the offer from Equinix, a company based in Redwood City, California which has a market capitalisation of $15 billion, compelling.
New York-listed Interxion's shares were due to start trading later on Friday.
Telecity had said in February Interxion shareholders would receive 2.3386 new Telecity shares for each Interxion share, valuing the offer at $2.2 billion when it was announced.