– Telecity plc (TCY LN)/ Equinix Inc (EQIX US): Regulatory news service was quoted that Equinix’ plan to sell some data centres in Amsterdam, London and Frankfurt to win EU approval could see third parties still complaining as the assets might be insufficient to allow a buyer to compete effectively, given a shortage of interconnection options. We still believe that EC approval will be forthcoming shortly given a) large (not necessarily needed) upfront willingness by Equinix to sell large number of individual data centres in Phase 1; b) still significant number of retail and wholesale competition out in all the individual markets, and c) limited number of vocal customer and competitor’s complaints. Continue to set up spread above Gbp 45 (1 TCY LN = 0.0336 EQIX + GBp 572.5 cash) which represents almost 4% net spread. Expect companies announcement in next week that share ratio will be adjusted from original 0.0327 EQIX shares to about 0.0336 to allow for Equinix scrip special dividend (which already went ex in October).
– Italcementi (IT IM) / HeidelbergCement (HEI GY): HeidelbergCement announces slight miss 3Q15 numbers. It stated that Italcementi acquisition is making good progress and synergy target significantly increased to €300mn from €175mn in July. It also confirms that all necessary regulatory pre-filings or filings were lodged with competition authorities in October as planned. All good signals/commentary for Italcementi acquisition with respect to synergies, timing/approvals, financing, however given long dated outstanding timetable (awaiting all regulatory approvals for 45% stake sale followed by Italian mandatory offer), Italcementi at EUR 10.15 or about 4% for 12 month timetable is touch too high – one to reassess below EUR 10.