TeleCity is to acquire rival data centre outfit Redbus in a move that sees further consolidation within Europe's colocation industry.

The takeover values Redbus at £59m with the enlarged group better able to compete in the fragmented data centre market. The deal also gives the enlarged group greater financial clout to invest in the business.

In particular, the take-over gives the group "an enlarged presence in the highly competitive European markets of London, Amsterdam, Paris and Frankfurt", the company said in a statement today.

Redbus operates seven facilities in London, Frankfurt, Amsterdam, Paris and Milan and boasts more that 800 clients including AOL, AT&T, BT, Vodafone, City Index, BBC and Google. In 2004 Redbus lost £1.1m on a turnover of £16m.

TeleCity operates nine datacentres across six European markets and has some 600 punters.

The offer was made by an outfit called Torch Partners on behalf of TeleCity. In the summer TeleCity agreed to a £58m buyout led by the 3i investment group. ®