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Digital Realty To Buy Interxion To Become Data Center Colocation King

The $8.4 billion merger of Digital Realty and European-focused Interxion will create a global data center behemoth consisting of more than 260 data centers.

With the planned acquisition of Interxion, Digital Realty is planting its stake in the ground as the world’s largest colocation data center provider, bringing its total number of data centers to more than 260.

Digital Realty is set to acquire Interxion in a stock-swap deal valued at $8.4 billion, a move that will significantly expand the San Francisco-based company’s footprint in Europe. Interxion’s European business consists of 53 facilities in 11 European countries and 13 metro areas including Paris, Frankfurt and Amsterdam, making it one of the most valuable data center providers in Europe.

Digital Realty CEO Bill Stein said the company will leverage Interxion’s data centers and expertise to drive colocation, scale and hyperscale sales throughout the globe. "This strategic and complementary transaction builds upon Digital Realty's established foundation of serving market demand for colocation, scale and hyperscale requirements in the Americas, EMEA and Asia-Pacific and leverages Interxion's European colocation and interconnection expertise, enhancing the combined company's capabilities to enable customers to solve for the full spectrum of data center requirements across a global platform," he said in a statement.

[Related: Red-Hot Cloud Storage Startup Wasabi Opens New Data Center]

The merger of Digital Realty and Interxion will create the leading pan-European data center provider, offering services to approximately 70 percent of the GDP in Europe, according to Digital Realty. The transaction is expected to close in 2020.

The other data center provider that competes globally against Digital Realty is Equinix, which recently embarked on a more than $1 billion venture to develop hyperscale data centers throughout Europe.

Equinix said it owns more than 200 data centers in 52 markets. The company also recently unveiled plans to acquire three data centers in Mexico from Axtel SAB for $175 million in a move that marks its entry into that market.

The data center market is on fire this year as cloud providers Amazon Web Services, Microsoft, Oracle and Google invest billions each quarter in constructing new or expanding on existing data centers. The data center M&A market is also on pace to become a record year with 52 data center-oriented acquisitions closed in the first half of 2019 alone.

Interxion is currently undergoing rapid data center expansion. The Netherlands-based data center provider has several data center development projects under construction with over $400 million invested and a total expected investment of $1 billion. The company said these projects represent a 40 percent expansion of Interxion’s stand-alone critical load capacity and will be delivered over the next two years.

A key goal with the merger of Digital Realty and Interxion is to enhance both companies’ capabilities to address the public and hybrid cloud requirements of Interxion and Digital Realty’s significant global customer base.

Interxion shareholders will receive a fixed exchange ratio of 0.7 Digital Realty shares per Interxion share, valuing Interxion at approximately $93.48 per share, or approximately $8.4 billion.

Stein will serve as CEO of the combined company. Interxion CEO David Ruberg will serve as chief executive of the company’s Europe, Middle East and Africa business, which will be branded Interxion, a Digital Realty company. Ruberg is expected to transition out of his role within one year after the deal is completed.

The board of directors of the combined company will consist of nine members designated by Digital Realty and one member designated by Interxion. Current Digital Realty board Chairman Laurence Chapman will serve as chairman of the board of the new combined company.

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