Interxion and TelecityGroup Reach Non-Binding Agreement on All-Share Merger

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Interxion announces 2014 preliminary unaudited results

Amsterdam – 11 February 2015 – Interxion Holding N.V. (“Interxion”) today announces that it has reached a non-binding agreement on an all-share merger with TelecityGroup plc (“TelecityGroup”). The proposed transaction would be structured as an offer by TelecityGroup for Interxion and the primary listing for the combined group would be in London, where TelecityGroup’s shares are admitted to trade on the London Stock Exchange (LSE: TCY); with a New York Stock Exchange listing for TelecityGroup’s existing ADR programme contemplated.

TelecityGroup, headquartered in the United Kingdom, is a provider of data centres, operating highly connected facilities in key European cities.

The boards of Interxion and TelecityGroup believe the combination of TelecityGroup and Interxion businesses is highly compelling. Demand for data centre services is evolving rapidly as enterprise data and digital applications migrate to the cloud. The combined business will allow the parties to provide customers with greater product choice and solutions for the dynamic and expanding needs of multi-faceted customers seeking to address global markets. The additional scale and scope of the combined operations will give customers an expanded product set, more robust connectivity choices, better landing points for access to European consumers and expanded gateways to new markets in Africa, Asia and Eastern Europe.

Further, the key benefits of the proposed combination would include:

  • Enhanced complementary customer offerings using the best practices of TelecityGroup and Interxion which, coupled with the expanded geographical footprint of the combined group, will give customers access to the combined portfolio of services across Europe;
  • Significant synergy potential. Incremental EBITDA from cost synergies and enhanced growth opportunities are estimated by TelecityGroup to be approximately £40m per year and capital expenditure synergies are estimated by TelecityGroup to have a net present value of approximately £300m. In total, this equates to a net present value of total synergies of approximately £600m. In addition, TelecityGroup would expect substantial incremental benefits from technology, capital productivity and commercial synergies, as well as tax and other financial synergies; and
  • Enhanced access to the capital markets and the opportunity of a lower cost of capital. Combined balance sheet strength and capital allocation discipline would enable the combined group to capitalise on future growth opportunities as well as deliver predictable capital returns to shareholders.

Under the terms of the non-binding agreement, Interxion shareholders would receive 2.3386 new TelecityGroup shares per Interxion share. As a result, Interxion shareholders would own approximately 45%, and TelecityGroup shareholders approximately 55%, of the combined group. The primary listing for the combined group would be in London with a New York Stock Exchange listing for TelecityGroup’s existing ADR programme contemplated.

John Hughes would be Chairman of the combined group, with John Baker as Deputy Chairman. David Ruberg would be appointed Chief Executive Officer of the combined group for a period of 12 months following completion of the transaction. He would lead the new, combined group and launch this exciting new phase for both TelecityGroup and Interxion. Eric Hageman would be appointed Chief Financial Officer. The board of the combined group would comprise a balance of independent non-executive directors from both TelecityGroup and Interxion.

Interxion Chairman John Baker said: “I believe that the combination of InterXion and Telecity represents an attractive value creation opportunity for our shareholders, with improved access to capital markets, reduced cost of capital and a strong balance sheet”.

Interxion CEO David Ruberg said: “Bringing together the assets and solutions offered by Interxion and Telecity will improve our customers’ ability to realize the benefits of transitioning to the cloud. Together, we expect to be able to further reduce our customers’ total cost of operation, help them deliver improved functionality to their customers, and deliver industry leading quality of service.”

TelecityGroup Executive Chairman John Hughes said: “We think that the combination of TelecityGroup and Interxion would represent an extremely compelling combination for all stakeholders of both companies. The transaction would truly transform both organisations and allow them to deliver a superior proposition to the joint customer base. In particular, we would like to thank David Ruberg for his key contribution in orchestrating this proposed transaction and we are delighted that he has agreed to launch the new combined group.”

Signing of a binding transaction agreement is subject to, amongst other things, satisfactory completion of mutual due diligence, approval by the Interxion and TelecityGroup’s boards of directors and the negotiation of definitive transaction documentation. Interxion and TelecityGroup have agreed not to solicit or discuss alternative proposals until 4 March 2015 by which time it is expected that a binding transaction agreement will be entered into. Completion is anticipated in the second half of 2015,subject to Interxion and TelecityGroup shareholder approvals and all relevant regulatory and antitrust approvals.

There can be no certainty that a binding agreement will be reached, nor as to the terms of such agreement.

Preliminary and Unaudited Financial Highlights
Interxion also announced certain unaudited financial information today for the three months and year ended 31 December 2014.

  • Revenue for the fourth quarter and full year is expected to have increased by 15% and 11% to approximately €89.9 million and €340.6 million, respectively (4Q 2013: €78.2 million; FY 2013: €307.1 million)
  • Adjusted EBITDA for the fourth quarter and full year is expected to have increased by 14% and 11% to approximately €38.7 million and €146.4 million, respectively (4Q 2013: €33.8 million; FY 2013: €131.8 million)
  • Adjusted EBITDA margin for the fourth quarter and full year are expected to be approximately 43% and 43%, respectively (4Q 2013: 43.2%; FY 2013: 42.9%)
  • Capital Expenditures, including intangible asset, are expected to total approximately €47.5 million in the fourth quarter and €216.0 million in the full year 2014

The foregoing information is based on preliminary results and is not intended to be a comprehensive statement of our financial or operational results for the three months ended and year ended 31 December 2014. This information has been prepared by and is the responsibility of management. The company’s external auditors have not audited, reviewed, compiled or performed any procedures with respect to this preliminary financial data. Accordingly, the company’s external auditors do not express an opinion or any other form of assurance with respect thereto. The preliminary results discussed above are derived from our management accounts, rather than our consolidated interim and full year financial statements which will be prepared in accordance with International Financial Reporting Standards. Our preliminary results are based on a number of assumptions that are subject to inherent uncertainties and subject to change. In addition, while we believe these assumptions to be reasonable, over the course of the next several weeks we will be completing our financial statements as of and for the three months ended and year ended 31 December 2014. Accordingly, our actual results may vary from our preliminary results above, and these variations could be material. As such, you should not place undue reliance on the preliminary results information set forth above.

Conference Call to Discuss Results
Interxion will release its fourth quarter and full year 2014 results on Wednesday, 4 March 2015, and will host a conference call at 8:30 a.m. ET (1:30 pm GMT, 2:30 pm CET) to discuss the results.

To participate on this call, U.S. callers may dial toll free 1-866-966-9439; callers outside the U.S. may dial direct +44 (0) 1452 555 566. The conference ID for this call is ‘INXN’. This event also will be webcast live over the Internet in listen-only mode at investors.interxion.com.

A replay of this call will be available shortly after the call concludes and will be available until 11 March 2015. To access the replay, U.S. callers may dial toll free 1-866-247-4222; callers outside the U.S. may dial direct +44 (0) 1452 550 000. The replay access number is 65645801.

For further information:
Jim Huseby
Investor Relations
Tel: +1-813-644-9399
IR@interxion.com

Perella Weinberg Partners LP
Scott Bruckner
Paulo Pereira
Riccardo Benedetti
Tel: +44.20.7268.2800 / +1.212.287.3200

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.

A copy of this announcement is also available, subject to certain restrictions relating to persons resident in restricted jurisdictions, on Interxion’s website at www.interxion.com. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.

Sources and Bases
Information contained within this announcement has been calculated on the basis of the following:

  • TelecityGroup basic number of shares of 202.9m and fully diluted number of shares of 204.6m
  • Interxion basic number of share of 69.3m and fully diluted number of shares of 70.9m
  • 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 close of business on 9 February 2015)

Notes to editors
Interxion (NYSE: INXN) 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, 400 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.

TelecityGroup is a provider of data centres in Europe, operating highly connected facilities in key cities. TelecityGroup plc is listed on the London Stock Exchange (LSE: TCY). www.telecitygroup.com

Forward-looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Factors that might cause such differences include, but are not limited to, the difficulty of reducing operating expenses in the short term, inability to utilise the capacity of newly planned data centres and data centre expansions, significant competition, the cost and supply of electrical power, data centre industry over-capacity, performance under service-level agreements, and other risks described from time to time in Interxion's filings with the Securities and Exchange Commission. In addition, the negotiations for the business combination may not advance, and even if they do, it may not be possible to enter into definitive documentation on satisfactory terms and close the agreement.

Interxion does not assume any obligation to update the forward-looking information contained in this press release.

Use of Non-IFRS Information
EBITDA is defined as operating profit plus depreciation, amortisation and impairment of assets. We define Adjusted EBITDA as EBITDA adjusted to exclude share-based payments, increase/decrease in provision for onerous lease contracts, transaction expenses and income from sub-leases on unused data centre sites. Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of revenue. We present EBITDA, Adjusted EBITDA and Adjusted EBITDA margin as additional information because we understand that they are measures used by certain investors and because they are used in our financial covenants in our €100 million revolving facility and €475 million 6.00% Senior Secured Notes due 2020. A reconciliation from Operating profit to EBITDA and EBITDA to Adjusted EBITDA is provided elsewhere in this press release.

Other companies, however, may present EBITDA, Adjusted EBITDA and Adjusted EBITDA margin differently than we do. EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are not measures of financial performance under IFRS and should not be considered as an alternative to operating profit or as a measure of liquidity or an alternative to net income as indicators of our operating performance or any other measure of performance derived in accordance with IFRS.

Interxion does not provide forward-looking estimates of Net profit, Operating profit, depreciation, amortisation, and impairments, share-based payments, or increase/decrease in provision for onerous lease contracts, and income from sub-leases on unused data centre sites, which it uses to reconcile to Adjusted EBITDA. Interxion is, therefore, unable to provide forward-looking reconciling information for Adjusted EBITDA.

Important information
This announcement is for informational purposes only and is not intended to, and does not, constitute or form part of an offer to sell or the solicitation of an offer to buy or subscribe to any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

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.

(in €’000 – except where stated otherwise)
(unaudited)

€ millions

  Three Months Ended (1) Year Ended (1)
  31 Dec 2014 31 Dec 2013 31 Dec 2014 31 Dec 2013
  Unaudtited   Unaudited  
Reconciliation to Adjusted EBITDA (2)        
Operating profit 18.8 19.0 78.4 70.4
Depreciation, amortisation and impairments 17.3 13.5 62.2 57.7
EBITDA 36.2 32.5 140.6 128.0
Share based payments 2.3 1.3 6.6 4.1
Increase/(decrease) in provision for onerous lease contracts - - (0.8) -
Transaction expenses 0.3 - 0.3 -
Income from sub-leases on unused data centre sites (0.1) - (0.3) (0.3)
Adjusted EBITDA 38.7 33.8 146.4 131.8
Adjusted EBITDA Margin 43% 43.2% 43% 42.9%

(1) Figures for the three months and year ended 31 December 2014 are approximate and unaudited.

(2) Amounts in the table have been rounded and accordingly may not add up to 100%.